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Basic Japanese Candlestick Patterns

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Candlestick charts are a technical tool that packs data for multiple time frames into single price bars. This makes them more useful than traditional open-high, low-close bars or simple lines that connect the dots of closing prices. Candlesticks build patterns that predict price direction once completed. Proper color coding adds depth to this colorful technical tool, which dates back to 18th-century Japanese rice traders.

A Japanese candlestick may be a sort of price chart that shows the opening, closing, high and low price points for every given period. Centuries ago, it was invented by Japanese rice merchants. Steve Nison, a broker in 1990s, popularized it among the Western traders.

Top 18 Japanese candlestick patterns:

Single Candlestick Patterns-

  1. Spinning tops
  2. Marubozu
  3. Doji
  4. Hammer
  5. Inverted Hammer
  6. Hanging Man
  7. Shooting Stars

Double candlestick patterns-

  1. Engulfing
  2. Harami
  3. Homing pigeon
  4. Tweezers

Triple Candlestick Patterns-

  1. Morning star
  2. Evening star
  3. Three white soldiers
  4. Three black crows
  5. Three inside up
  6. Three inside down
  7. Rising and falling three

Japanese candlestick patterns depend on three elements- colors, body and the wick. In order to understand it, one needs to get familiarized with these three elements. Its color tells you the direction of movement within the amount, its body displays the market’s opening and shutting levels and its wick shows the high or low range.

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