There are many different types of charting tools can give a strong visual interpretation for stock traders. Japanese Candlestick Charting is the highly recommended trading tool of investing for dummies to see market sentiment change quickly.

Japanese Candlestick Charting is made up of an opening price, closing price, the high of the time frame and the low of the time frame. Basically it consists of two components:

  • Body - to represents the opening and closing price for the trading session
  • Shadows – referred to as wicks or tails on the body. It represents the high and low of the trading session relative to the opening and closing prices.

candlestick chart
As the picture shown, the price action resembles that of an actual candle. The candlestick chart can be displayed in any time frame, from a 1 minute chart to daily or yearly chart, by extended range outside of the opening and closing price on any given chart.

The shadow movement of the Japanese Candlestick Charting and the color of chart body are indicating something on markets direction. Below are reasons why this trading tool is highly recommended for investors to do technical analysis of stock trends:

  • Know better time entries and better time exits
  • Able to spot market turning points earlier
  • To understand the “Crowd Psychology” before the “indicators” do
  • Can predict market support and resistance levels
  • Offer a more detail and vivid depiction of price action compare to other standard bar chart

Click here for learning how to see these signals and read the candlesticks which can give you an advantage in any market condition.

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