Japanese candles tool in the Forex market
We can say that Forex traders are unanimous in asserting that the tool “Japanese candles” is the most informative and quite effective means of technical analysis, often used by numerous analysts of the currency market. Forex experts, who regularly practice candle analysis note the quick reaction of the Japanese candle to the slightest change in quotations.
- Application of Japanese candles
- Structure of a Japanese candle
- What do the Japanese candles indicate
Undoubtedly, this circumstance favors the frequent use of the tool “Japanese candles” for prompt prognostics of the dynamics of the course on Forex and timely detection of current trends for this market, both current and longer (long).
Application of Japanese candles
It is notable that the tool “Japanese candles” can be used by traders (analysts) Forex simultaneously in two aspects:
- “Japanese candles” as a way of graphically displaying information about changing currency quotations;
- “candle analysis” as a tool for graphical analysis of Forex, allowing to predict the dynamics of the course based on the timely identification and study of “candle models” (patterns).
Structure of a Japanese candle
Today the tool “Japanese candles” is presented in every trading terminal, which is intended for daily work on Forex. In addition, many modern Forex strategies are based on the mapping of the market situation through Japanese candles, and the aforementioned “candlestick analysis” is most often used by many traders who basically do not want to use computer mathematical indicators to analyze the market. Meanwhile, it is worth noting that “candle analysis” can be very good and useful addition to indicators of mathematical analysis, taking into account the statistics of quotations.
The Japanese candle consists of two defining elements:
- “body” which graphically reflect the range of achieved quotes between the opening price of the corresponding session and the price of its closing;
What do the Japanese candles indicate
Each such Japanese candle which is marked on the price chart, clearly reflects the totality of quotations reached by the market for a specific trading session of a certain duration (timeframe). Thus, the Japanese candle reflects the actual dynamics of the market, accumulating relevant data and graphically showing them.
The range between the end of the upper shadow and the end of the lower shadow characterizes the overall range of prices “worked out” by the market following the results of the corresponding trading session. The body of white color indicates the fact that the market on the basis of the relevant session closed with an increase. The black body indicates the fact that the market closed down on the results of the corresponding session.