Japanese Candlestick Technical Analysis
As a form of technical analysis, a Japanese chart and candlestick pattern analysis can benefit anyone who wants to have another tool at their disposal. This is a tool that will help sort out and control the constant disruptions and continued outside influences to stock market analysis.
What does a Japanese candle chart offer that typical Western high-low bar charts do not? As far as actual data displayed — nothing. However, when it comes to visual appeal and the ability to see data relationships easier, candlesticks on a Japanese chart are exceptional. It reveals quick insight to the recent trading psychology and investor sentiment. After a minimal amount of practice and familiarization, Japanese candlesticks will likely become part of your technical analysis methods.
Japanese candlesticks offer a quick picture into the psychology of trading, studying the effect, not the cause. This places Japanese candlesticks squarely into the category of technical analysis. We cannot ignore the fact that prices are influenced by trader’s psychologically driven emotions of fear, greed, and hope. Some form of technical analysis must be used to analyze the changes in these psychological factors. Japanese candlesticks read the changes in the makeup of trader’s interpretations of value, otherwise known as investor sentiment. This is then reflected in price movement. Japanese candlesticks show the interaction between buyers and sellers. A Japanese chart provides insight into the financial markets that is not readily available with other charting methods. It works well with stocks, commodities, and Forex.
This introduction to Japanese candlestick charting and technical analysis will also provide information about the usefulness of Japanese candlestick patterns as a technical analysis tool. All methods of technical analysis and all assumptions will be open and visible. You will either begin to use candlesticks and a Japanese chart to assist in your market analysis and timing or be confident enough in them to further your own research into Japanese candlestick technical analysis.