While we briefly covered Japanese candlestick charting analysis in the previous forex lesson, we’ll now dig in how to use candlesticks in forex trading little and discuss them more in detail. Let’s do a quick review first.
Japanese Candlestick Trading Back in the day when Godzilla was still a cute little lizard, the Japanese created their own old school version of technical analysis to trade rice. Steve researched, studied, lived, breathed, ate candlesticks, and began to write about it. Slowly, this secret technique grew in popularity in the 90’s. To make a long story short, without Steve Nison, candlestick charts might have remained a buried secret. They are used to describe the price action during the given time frame. Japanese candlesticks are formed using the open, high, low, and close of the chosen time period.
What is the Best Technical Indicator in Forex? Z is keep your mouth shut. We introduce people to the world of currency trading, and provide educational content to help them learn how to become profitable traders. We’re also a community of traders that support each other on our daily trading journey.
In order to read and benefit from currency charts, you’ll need to get them from a legitimate provider. Most of the smaller traders and investors who profit from currency trading use charts that are offered directly from their brokerage services. Select a time frame for your currency chart. One of the most important steps in using currency charts, or any other kind of financial chart, is to set a specific time frame. The values that you view are only relevant to the specific time frames that you establish for them.
Observe your currency chart for the desired time frame. You will see a line graph that represents changes in currency value over that period of time. Look at your line graph against your Y axis. The Y axis, or horizontal axis, for a currency chart most often indicates a comparative asset price. The X axis for your currency chart represents your time frame.
You will see that both of these axes have scaled, segmented values, where your line graph fluctuates in a variable way. Advanced traders and others look for specific visuals in a currency chart to try to predict which way future prices will go. Understand candlestick charting to take advantage of this advanced financial resource. Candlestick charts show a range of traits for a specific trading day, with a top and bottom that illustrate price movement. Look for items like Fibonacci retracement. A Fibonacci retracement is a specific kind of price spike or dip where a reversal can signify a general trend. Read up on this sort of predictive tool and apply it to your currency chart observation.