Japanese Candlestick Charting Method Pattern S.DOCVIP

Japanese Candlestick Charting Method Pattern Strategy History of Candlestick Charts Candlestick charts are on record as being the oldest type of charts used for price prediction. They date back to the 1700s, when they were used for predicting rice prices. In fact, during this era in Japan, Munehisa Homma become a legendary rice trader and gained a huge fortune using candlestick analysis. He is said to have executed over 100 consecutive winning trades! The candlesticks themselves and the formations they shape were give colorful names by the Japanese traders. Due in part to the military environment of the Japanese feudal system during this era, candlestick formations developed names such as counter attack lines and the advancing three soldiers. Just as skill, strategy, and psychology are important in battle, so too are they important elements when in the midst of trading battle. What do Candlesticks Look Like? Candlestick charts are much more visually appealing than a standard two-dimensional bar chart. As in a standard bar chart, there are four elements necessary to construct a candlestick chart, the OPEN, HIGH, LOW and CLOSING price for a given time period. Below are examples of candlesticks and a definition for each candlestick component: ?  The body of the candlestick is called the real body, and represents the range between the open and closing prices. A black or filled-in body represents that the close during that time period was lower than the open, (normally considered bearish) and when the body is open or white, that means the close was higher than the open (normally bullish). The thin vertical line above and/or below the real body is called the upper/lower shadow, representing the high/low price extremes for the period. Bar Compared to Candlestick Charts Below is an example of the same price data conveyed in a standard bar chart and a candlestick chart. Notice how the candlestick chart appears 3-dimensional, as price data almost jumps