How to Read Candlestick Chart in Forex Trading
One way to analyze technically is to read candlestick charts. According to technical analysis, from the candlestick provided data that has been formed, we can expect what kind of candle next will be formed. Whether the candle above or the candle will go down. So if we have a picture of what candles will be formed, we can make a decision whether to buy or sell.
So, here's how to read candlestick charts:
In psychology, candles are formed due to sales pressure and encourage purchases. This difference in volume and pressure encourages the different forms of candlesticks to each other.
Candlestick Time Line:
- If there are many buyers who buy, then the market price will increase so that at the end of the market period closed above the opening price, and finally formed candle rise (green).
The quantity of purchases can be measured by a series of market movements from low to close. The larger the drive, the greater the shape of the body wax. So the size of this green candle body shows the dominance of the buyer.
- When many traders make a sale, the market price falls, so that at the end of the period the market closing value is usually lower than the opening price. This condition causes the wax to form red (bottom).
On the bottom candle (red) the pressure of the seller is measured from top to bottom. The bigger the sales pressure, the lower the price and the longer red wax body form. So the size of this red wax body shows the number of seller dominance.
To determine the direction of the next candle, there are several things to note. This is:
- Resistance
- Accelerate movement
- Level of slowdown
- Undo
- Meet
1. Resistance
The point is that when one party dominates the market the candle will move in one direction. For example when buyers control the market then candles continue to increase. As long as there is no resistance from the seller (ie sales means) the candle is formed after the previous candle trend.
Until one day some traders feel that the price is too high or already very saturated, then the sale comes as a form of resistance from the seller. One reason is to take profit taking action.
The shape of resistance appears from the wax. If the resistance is greater than hegemony, then the opposition party is the winner there will be a change in market dominance, so the trend will reverse direction. From here we can expect that the next candle will reverse the trend as well.
2. Candlestick Sublimation
The wax body larger than the previous candle seemed impulsive. So when many traders are anxious to open a position, this will generate the power to move the market and so towards this kind of enthusiasm. Moreover, there is no resistance, then we can predict the candle that will form towards the enlarged candle.
3. Candlestick Lore
Contrary to enthusiasm, the reluctance of traders to open positions causes a slowdown in the market. This suspicion arises because traders control the market too high, very low, saturation or market conditions are in the area of support and resistance. In the absence of traders who open positions, then there is no energy to move the market.
In these circumstances we must be ready to open positions behind the trend, because the market will be seized by either party.
4. Candlestick travel guides
In saturated market mode there will be a party trying to end the trend, who wants to reverse the trend. But sometimes business starts with test conditions, minigiste whether the market can actually turn or not. The tail of this long candle is distinguished by the direction of the current trend.
Chronology before the end of the period as if the candle formed the opposite direction of the previous candle. Towards the end of the wax they are pulled back and closed in the direction of the previous candle.
Continuous experience shows reversal. So in this case we can get ready to open a position against the trend.
A decrease in the candle and resistance of the body (# 2) indicates that most traders expect a market reversal. But when suddenly a candle shows the enthusiasm that still fits the current trend (No. 3), this is questionable.
It can be like when everyone wants one thing, but there is one person who wants different things, so when viewed from his strength, the power of one person is really small and can be said to be empty, so it is very easy to win.
Candle convergence conditions can also occur because there are some parties who want to get the best price, although already know that the market will reverse the trend, but still pull it to be higher or lower first to get a better price, then the mobility market is reversed .
In these circumstances, we see other indicators, if other indicators are also close, then we can open a position against the trend that has occurred.
Those are the things that must be known of the candlestick to determine the next candlestick.
Please read the other candelastic tasting articles on this site, because explaining how to read dessert can only be through one page, so to read the candlestick we need to master the other knowledge.