japanese candlestick pattern by steve nison

Shooting star - a bearish pattern during an uptrend Shaven bottom - signaling bottom reversal, however confirmation must be obtained from next trade Inverted hammer - signals bottom reversal, however confirmation must be obtained from next trade Hanging man - bearish pattern during an uptrend

Hammer - a bullish pattern during a downtrend Shaven head - a bullish pattern during a downtrend White candlestick - signals uptrend movementīlack candlestick - signals downtrend movement There are multiple forms of candlestick chart patterns: There are four elements necessary to construct a candlestick chart, the OPEN, HIGH, LOW and CLOSING price for a given time period. Furthermore, combined with other technical analysis tools, candlestick pattern analysis can be a very useful way to select entry and exit points.Ĭandlestick charts are much more appealing and understandable than a standard two-dimensional bar chart. Traders who use candlesticks are likely to more quickly identify different types of price action that tend to predict reversals or continuations in trends. Offering a wider range of information than traditional bar charts candlesticks give emphasis to the relationship between close price and open price. Trading with Japanese Candle Charts allow speculators to better comprehend market feelings. Steve Nison is normally credited with popularizing candlestick charting in the west and is recognized as a leading expert on how a trader might interpret the readings.Ĭandlesticks provide specific visual cues that make understanding price movement easier. If the close is above the open, the body is white or green (not filled) if the close is below the open, the body is black or red (filled).

A wider body marks the area between the open and the close, referred to as real body. Candlestick charts display the high, low, open, and close for a commodity each day over a specified period of time, in a format similar to a bar chart, but in a manner that maximizes the relationship between the opening and closing prices.Ī narrow line shows the day's price range.

In the 1700s a Japanese man named Homma, a trader in the futures market, developed a method of technical analysis to analyze the price of rice contracts known as candlestick charting.

Japanese candlestick pattern by steve nison