Learning Forex: You have to know candlestick chart as one type of chart that is popular among traders. That
said, the chart of this type was first used in Japan around the 17th
century to account for the movement of the price of rice. Munehisa Homma was a rice trader at that time regarded as a pioneer of the method. According to Steve Nison, the method might have been started after the 1850s. Steve Nison itself is one of those known to popularize the method of
analysis using candlestick patterns (candlestick pattern) to the
"western world" through his book "Japanese Candlestick Charting
Techniques".
Mechanical analysis using candlestick pattern actually "change" candlestick into such "indicators". By recognizing certain patterns, you can predict where the price will move next. Keep in mind that the candlestick pattern is usually followed by a short-term correction. The patterns are useful for traders who want to take advantage of the opportunities a correction. Nevertheless, it is also possible that the candlestick pattern can be followed by a reversal (reversal) for a longer period of time.In this chapter, you will learn some candlestick patterns that hopefully will be able to be utilized in forex trading.
Candlestick SINGLE PATTERN (BASIC)
We start from the basic pattern first candlestick. Archetypes that we will discuss is marubozu, long candle, spinning tops, doji, hammer / hanging man and inverted hammer / shooting star.
a. Marubozu
Marubozu is a candlestick that has no shadow. If anything, the shadow is very, very short so that at first glance is not visible. Instead, the body is relatively long marubozu. Marubozu emergence indicates that the bearish or bullish pressure is very big in that period.There are two types of marubozu, namely marubozu bullish and bearish marubozu. Bullish marubozu is marubozu in the form of a long bullish candlestick and has no shadow. Conversely, bearish marubozu is a long bearish candlestick that does not have a shadow.Just to remind, are generally bullish candlestick represented by the color white (blank) sedangan bearish candlestick represented in black. Therefore bullish marubozu also often referred to as white marubozu, while bearish marubozu referred to as black marubozu.
It's already been said that the emergence marubozu means signifies that the pressure strong bearish or bullish. Thus, the appearance of bullish marubozu be a sign that at that time a very strong bullish pressure. In contrast, the emergence of bearish marubozu indicates that at that time a very strong bearish pressure. Therefore you need to be careful if this pattern appears.
b. Long Candle
Long candlestick candle is relatively long. The main criterion is the length of his body. There are two types of long candle: long bullish candle and certainly long bearish candle. The difference with marubozu, long candle still have the shadow clearly visible.
c. Spinning Tops
Spinning tops is a candlestick that has upper shadow and a long lower shadow but has a small body. Body color of spinning tops is not very important, because of the emergence of this pattern reflects the "hesitations market", whether to bullish or bearish.
Body small it illustrates that the real strength of bullish and bearish same magnitude. That is what is meant by "doubts the market". Spinning tops when it appears at the end of an uptrend, it is possible that the market will turn into a downtrend. Similarly, if the spinning tops appear at the end of a downtrend, it
is possible that there will be a turnaround into an uptrend.
However, spinning tops requires confirmation of the next candlestick so that you can estimate the direction of further movement.Basically spinning tops are neutral patterns. Although spinning tops appear at the end of an uptrend, it is not necessarily a turnaround will occur. Opportunities reverse direction will be even greater if the spinning tops that appear at the end of the uptrend followed by a long bearish candlestick. Similarly, spinning tops that appear at the end of a downtrend, requiring bullish candlestick for confirmation.
d. Doji
Doji is also a neutral pattern. It takes the next candlestick confirmation so you can predict market direction next. Doji shape is similar to spinning tops, only he did not have the body for the open price equal to the price of its close. Or, his body is so small that at first glance looks difficult and only visible as a thin line.Just like spinning tops, doji also illustrates a balanced fight between the bull by the bear.There are four types of doji, namely the long-legged doji, dragonfly doji, gravestone doji doji and four price.
Long-legged doji easily recognizable from his long shadow. Clearly, the shadow can be seen clearly and has a length that is almost the same, or at least not too much difference in length.Dragonfly Doji has a price open, close and high of the same or almost the same. Shaped like the letter "T". However there are times when the location of the "body" slightly downwards so dragonfly doji has a shape like a cross. The term was taken because of dragonfly doji has a shape similar to a dragonfly.
Gravestone doji has the open, close and low of the same or almost the same. Gravestone Doji is named because of its shape resembling tombstones. There are times when the position of "body" slightly upward so that its shape resembles inverted cross.Four price doji is doji that has the open, close, high and low alike.
Occurrences doji usually indicates that the bullish or bearish pressure began to decrease. So if doji appears when the uptrend, it is a sign that the bullish pressure decreases, whereas if the doji appears when the downtrend means that the bearish pressure began to decrease. But once again, the necessary confirmation from the next candlestick to action. Remember always that the doji are neutral patterns.
e. Hammer and Hanging Man
Hammer and hanging man is actually the "twin brothers". Both have the same form: both have a petite body and a long lower shadow. Upper shadow barely visible, even hammer / hanging man is perfect at all has no upper shadow.
Hammer / hanging man is good to have lower shadow length of at least 1.5 (one half) times the length of its body. Several other references mentioned lower shadow at least two to three times longer than its body.
What distinguishes hammer and hanging man is its location. Hammer is always located in the valley, while the hanging man is always at the top.
Occurrences hammer is a bullish signal or signals, while the appearance of hanging man is a bearish signal. But the emergence of hammer or hanging man is not necessarily a strong signal. Hammer would be a strong bullish signal if it is supported by a bullish candle after emergence. Hanging man would be a bearish signal is stronger if it is supported by the emergence of bearish candle thereafter.
In practice, candlestick patterns are often combined with indicators and other analytical tools, such as stochastic or Fibonacci retracement.
f. Inverted Hammer and Shooting Star
Inverted hammer and shooting star also is the twin brother. Their shape is similar to a hammer and hanging man is reversed. Both have a body that is too cute and upper shadow which usually has a length of about 1.5 (one half) of up to three times the length of its body. Lower shadow barely visible, even the perfect shape has no lower shadow at all.
Called inverted hammer if it is located in the valley, whereas if you look at the top then called a shooting star.
Inverted hammer is a bullish signal and requires confirmation of a bullish candlestick that come after. While shooting star is a bearish signal that also require confirmation of the bearish candlestick that come after.
Candlestick DUAL PATTERN
Once you learn the basic pattern is a single candlestick pattern, now you will go up one level to study the dual candlestick pattern. Patterns that you will learn is engulfing, dark cloud cover, piercing line and tweezer.
a. Engulfing pattern
There are two types of engulfing pattern, the bullish engulfing and bearish engulfing. Based on the name you would have guessed what the implications posed by the two patterns.
The picture above shows the bullish engulfing and bearish engulfing. If you see, a pattern engulfing candlestick can be recognized when there is longer than the previous candlestick. But not enough to just "longer". Candlestick longer must look as if "covering" the previous candlestick.Bullish engulfing pattern is a pattern that indicates a potential bullish. In the picture above shows that the bullish candlestick that appeared longer than the previous bearish candlestick. Low
price of bullish candlestick do not need to be lower than the previous
bearish candlestick low price, but the price of its high must be higher
than the high price of the previous candlestick. The close price of the bullish candlestick should also be higher than
the previous candlestick high price, but it is not a necessity. Bearish engulfing is the opposite of the bullish engulfing. This pattern indicates a potential bearish. This pattern is characterized by the emergence of bearish candlestick longer than previous bullish candlestick.
To make it easier, you memorize any time by using a larger sign (>) and smaller (<) like this:
Bullish engulfing:
Bullish candlestick length> before long bearish candlestick
Price high bullish candlestick> bearish candlestick previous high price
Prices closed bullish candlestick> bearish candlestick previous high price (not a requirement) Bearish engulfing:
Long bearish candlestick > long bullish candlestick previous
Low price bearish candlestick < previous bullish candlestick low prices
Price closes bearish candlestick < bullish candlestick previous low prices (not a requirement)
b. Harami
Harami pattern is said to be the opposite of the engulfing pattern. The difference, in Harami candlestick appearing smaller than the previous candlestick.
Note that the bullish Harami candlestick bullish marked by the emergence of smaller than the previous candlestick is a bearish candlestick. While the bearish Harami candlestick is characterized by the emergence of bearish candlestick smaller than before.
Bullish Harami is a bullish pattern, while the bearish Harami is a bearish pattern.
c. Dark Cloud Cover & Piercing Line
Dark cloud cover and piercing line is also a double candlestick pattern that is quite popular. Dark cloud cover is a bearish pattern, otherwise piercing line is a bullish pattern.
Piercing line occurred in the valley and is a bullish pattern as mentioned previously. The pattern consists of a candlestick bullish and a bearish candlestick. A pattern can be called as a piercing line if it meets the following requirements:
Bullish candlestick low prices lower than the previous bearish candlestick low price.
Bullish candlestick price closes higher than the previous close price bearish candlestick.
Bullish candlestick body length of at least half the length of the previous bearish candlestick body.Dark cloud cover occurs at the top and is a bearish pattern. Terms of this pattern are as follows:
Bearish candlestick high price is higher than previous bullish candlestick high prices.
Bearish candlestick price closes lower than the previous close price bullish candlestick.
Bearish candlestick body length of at least half the length of the previous bullish candlestick body.
d. Tweezer
There are two kinds of patterns tweezer, namely tweezer tweezer top and bottom. This pattern is a pattern that is quite rare. Tweezer word can mean "clamp" if translated into Indonesian. It is said that this name was given because the pattern shape is similar to a clamp.
It's easy recognize this pattern. Tweezer Bottom is a form of hammer side by side, while the tweezer top is an inverted hammer (shooting star, because it is above) are side by side.
TRIPLE Candlestick PATTERN.
Candlestick pattern that is also popular is a candlestick pattern that consists of three candlesticks. We will discuss the triple candlestick pattern that is popular only.
a. Morning star and evening star
We start from triple candlestick pattern that is most popular, the morning star and the evening star. These patterns are popular because its appearance is usually followed by a correction that is longer than the other patterns.
Morning star is a bullish indication, while the evening star had a bearish indication.Morning star can recognize can be characterized as follows:
The first candlestick is a bearish candlestick, which is part of a downtrend.
The second candlestick is a candlestick that has a smaller body, it could be bullish or bearish candlestick. This indicates that the start there was "skepticism" in the market.
The third is a bullish candlestick candlestick candlestick longer than a second. Length is not necessarily the same as the first candlestick, but its position close price must exceed half of the first candlestick body. This is confirmation of the formation of morning star pattern.
Now, if the evening star is the morning star opposite of the above:
The first is a bullish candlestick Candlestick, which is part of an uptrend.
The second candlestick is a candlestick that has a smaller body, bullish or bearish is not important.
The third candlestick is a bearish candlestick candlestick longer than a second. Length is not necessarily the same as the first candlestick, but its position close price must exceed half of the first candlestick body. This is confirmation of the formation of the pattern of the evening star.
There are times when the 2nd candlestick is a doji. The name of the pattern will be modified into a morning doji star or evening doji star.
b. Three white soldiers and three black crows
Three
white soldiers pattern is three bullish candlestick appearing
sequentially during the downtrend, which is a bullish signal. This
pattern is a pattern that is considered a strong bullish signal,
especially if it appears at the time of entering a phase of
consolidation of downtrend. Consolidation phase in a trend itself is when the prices tend to move sideways.
Candlestick first in this pattern of course is a bullish candlestick. Candlestick-2 must still be a bullish candlestick that its body is longer than the first candlestick. In addition, the distance between the close and the high price of the second candlestick also should not be too far away. His upper shadow should be very short or nonexistent.
This pattern will be complete with the emergence of the third candlestick whose length is at least equal to the second candlestick or longer. Shadow is also to be very short or nonexistent. Would be better if the third candlestick is a white marubozu."Opponents" of three white soldiers are three black crows. The pattern is a bearish pattern, which is the appearance of three consecutive bearish candlestick on the uptrend.Candlestick first in this pattern is a bearish candlestick. The second candlestick must still be a bearish candlestick that its body is longer than the first candlestick. His lower shadow should be very short or nonexistent.
Confirmation of this pattern is the emergence of the third candlestick whose length is at least equal to the second candlestick or longer. Shadow is also to be very short or nonexistent. If the third candlestick is a black marubozu, then this pattern will get better.Well, just here out of our discussion about candlestick pattern. Actually there are many candlestick patterns that are not discussed here, because we only discuss the pattern of recurring and popular course.
Mechanical analysis using candlestick pattern actually "change" candlestick into such "indicators". By recognizing certain patterns, you can predict where the price will move next. Keep in mind that the candlestick pattern is usually followed by a short-term correction. The patterns are useful for traders who want to take advantage of the opportunities a correction. Nevertheless, it is also possible that the candlestick pattern can be followed by a reversal (reversal) for a longer period of time.In this chapter, you will learn some candlestick patterns that hopefully will be able to be utilized in forex trading.
Candlestick SINGLE PATTERN (BASIC)
We start from the basic pattern first candlestick. Archetypes that we will discuss is marubozu, long candle, spinning tops, doji, hammer / hanging man and inverted hammer / shooting star.
a. Marubozu
Marubozu is a candlestick that has no shadow. If anything, the shadow is very, very short so that at first glance is not visible. Instead, the body is relatively long marubozu. Marubozu emergence indicates that the bearish or bullish pressure is very big in that period.There are two types of marubozu, namely marubozu bullish and bearish marubozu. Bullish marubozu is marubozu in the form of a long bullish candlestick and has no shadow. Conversely, bearish marubozu is a long bearish candlestick that does not have a shadow.Just to remind, are generally bullish candlestick represented by the color white (blank) sedangan bearish candlestick represented in black. Therefore bullish marubozu also often referred to as white marubozu, while bearish marubozu referred to as black marubozu.
b. Long Candle
Long candlestick candle is relatively long. The main criterion is the length of his body. There are two types of long candle: long bullish candle and certainly long bearish candle. The difference with marubozu, long candle still have the shadow clearly visible.
Spinning tops is a candlestick that has upper shadow and a long lower shadow but has a small body. Body color of spinning tops is not very important, because of the emergence of this pattern reflects the "hesitations market", whether to bullish or bearish.
However, spinning tops requires confirmation of the next candlestick so that you can estimate the direction of further movement.Basically spinning tops are neutral patterns. Although spinning tops appear at the end of an uptrend, it is not necessarily a turnaround will occur. Opportunities reverse direction will be even greater if the spinning tops that appear at the end of the uptrend followed by a long bearish candlestick. Similarly, spinning tops that appear at the end of a downtrend, requiring bullish candlestick for confirmation.
d. Doji
Doji is also a neutral pattern. It takes the next candlestick confirmation so you can predict market direction next. Doji shape is similar to spinning tops, only he did not have the body for the open price equal to the price of its close. Or, his body is so small that at first glance looks difficult and only visible as a thin line.Just like spinning tops, doji also illustrates a balanced fight between the bull by the bear.There are four types of doji, namely the long-legged doji, dragonfly doji, gravestone doji doji and four price.
Gravestone doji has the open, close and low of the same or almost the same. Gravestone Doji is named because of its shape resembling tombstones. There are times when the position of "body" slightly upward so that its shape resembles inverted cross.Four price doji is doji that has the open, close, high and low alike.
Occurrences doji usually indicates that the bullish or bearish pressure began to decrease. So if doji appears when the uptrend, it is a sign that the bullish pressure decreases, whereas if the doji appears when the downtrend means that the bearish pressure began to decrease. But once again, the necessary confirmation from the next candlestick to action. Remember always that the doji are neutral patterns.
e. Hammer and Hanging Man
Hammer and hanging man is actually the "twin brothers". Both have the same form: both have a petite body and a long lower shadow. Upper shadow barely visible, even hammer / hanging man is perfect at all has no upper shadow.
What distinguishes hammer and hanging man is its location. Hammer is always located in the valley, while the hanging man is always at the top.
In practice, candlestick patterns are often combined with indicators and other analytical tools, such as stochastic or Fibonacci retracement.
f. Inverted Hammer and Shooting Star
Inverted hammer and shooting star also is the twin brother. Their shape is similar to a hammer and hanging man is reversed. Both have a body that is too cute and upper shadow which usually has a length of about 1.5 (one half) of up to three times the length of its body. Lower shadow barely visible, even the perfect shape has no lower shadow at all.
Candlestick DUAL PATTERN
Once you learn the basic pattern is a single candlestick pattern, now you will go up one level to study the dual candlestick pattern. Patterns that you will learn is engulfing, dark cloud cover, piercing line and tweezer.
a. Engulfing pattern
There are two types of engulfing pattern, the bullish engulfing and bearish engulfing. Based on the name you would have guessed what the implications posed by the two patterns.
To make it easier, you memorize any time by using a larger sign (>) and smaller (<) like this:
Bullish engulfing:
Bullish candlestick length> before long bearish candlestick
Price high bullish candlestick> bearish candlestick previous high price
Prices closed bullish candlestick> bearish candlestick previous high price (not a requirement) Bearish engulfing:
Long bearish candlestick > long bullish candlestick previous
Low price bearish candlestick < previous bullish candlestick low prices
Price closes bearish candlestick < bullish candlestick previous low prices (not a requirement)
b. Harami
Harami pattern is said to be the opposite of the engulfing pattern. The difference, in Harami candlestick appearing smaller than the previous candlestick.
Bullish Harami is a bullish pattern, while the bearish Harami is a bearish pattern.
c. Dark Cloud Cover & Piercing Line
Dark cloud cover and piercing line is also a double candlestick pattern that is quite popular. Dark cloud cover is a bearish pattern, otherwise piercing line is a bullish pattern.
Bullish candlestick low prices lower than the previous bearish candlestick low price.
Bullish candlestick price closes higher than the previous close price bearish candlestick.
Bullish candlestick body length of at least half the length of the previous bearish candlestick body.Dark cloud cover occurs at the top and is a bearish pattern. Terms of this pattern are as follows:
Bearish candlestick high price is higher than previous bullish candlestick high prices.
Bearish candlestick price closes lower than the previous close price bullish candlestick.
Bearish candlestick body length of at least half the length of the previous bullish candlestick body.
d. Tweezer
There are two kinds of patterns tweezer, namely tweezer tweezer top and bottom. This pattern is a pattern that is quite rare. Tweezer word can mean "clamp" if translated into Indonesian. It is said that this name was given because the pattern shape is similar to a clamp.
TRIPLE Candlestick PATTERN.
Candlestick pattern that is also popular is a candlestick pattern that consists of three candlesticks. We will discuss the triple candlestick pattern that is popular only.
a. Morning star and evening star
We start from triple candlestick pattern that is most popular, the morning star and the evening star. These patterns are popular because its appearance is usually followed by a correction that is longer than the other patterns.
The first candlestick is a bearish candlestick, which is part of a downtrend.
The second candlestick is a candlestick that has a smaller body, it could be bullish or bearish candlestick. This indicates that the start there was "skepticism" in the market.
The third is a bullish candlestick candlestick candlestick longer than a second. Length is not necessarily the same as the first candlestick, but its position close price must exceed half of the first candlestick body. This is confirmation of the formation of morning star pattern.
Now, if the evening star is the morning star opposite of the above:
The first is a bullish candlestick Candlestick, which is part of an uptrend.
The second candlestick is a candlestick that has a smaller body, bullish or bearish is not important.
The third candlestick is a bearish candlestick candlestick longer than a second. Length is not necessarily the same as the first candlestick, but its position close price must exceed half of the first candlestick body. This is confirmation of the formation of the pattern of the evening star.
There are times when the 2nd candlestick is a doji. The name of the pattern will be modified into a morning doji star or evening doji star.
b. Three white soldiers and three black crows
Candlestick first in this pattern of course is a bullish candlestick. Candlestick-2 must still be a bullish candlestick that its body is longer than the first candlestick. In addition, the distance between the close and the high price of the second candlestick also should not be too far away. His upper shadow should be very short or nonexistent.
This pattern will be complete with the emergence of the third candlestick whose length is at least equal to the second candlestick or longer. Shadow is also to be very short or nonexistent. Would be better if the third candlestick is a white marubozu."Opponents" of three white soldiers are three black crows. The pattern is a bearish pattern, which is the appearance of three consecutive bearish candlestick on the uptrend.Candlestick first in this pattern is a bearish candlestick. The second candlestick must still be a bearish candlestick that its body is longer than the first candlestick. His lower shadow should be very short or nonexistent.
Confirmation of this pattern is the emergence of the third candlestick whose length is at least equal to the second candlestick or longer. Shadow is also to be very short or nonexistent. If the third candlestick is a black marubozu, then this pattern will get better.Well, just here out of our discussion about candlestick pattern. Actually there are many candlestick patterns that are not discussed here, because we only discuss the pattern of recurring and popular course.
