Japanese candlesticks show price movement between two currency pairs. Let’s take a detailed look into learning more about them…
What does Candlestick Trading consist of?
Back in the old days, before anyone thought of Japan as the country it is today, the Japanese created their own type of analysis to trade rice. Yeah I said it, rice.
Steve Nison, a westerner, discovered their techniques and called them “Japanese Candlesticks” … His broker friend taught him more and he began learning everything he could about them after that. He eventually started to write about them and they increased in popularity in the 1990’s. Steve Nison is who we have to thank for candlesticks today. Without him, we would still be looking at those hard to read bar charts.
Alright, so what the heck are Forex candlesticks?
It’s easier to explain with a picture:
Candlestick charts can be used over any time frame you can think of. Whether it is a day, a month, 6 years, or 15 seconds, candlesticks can do it. They are a simple indicator of the price fluctuation over the given time.
Candlesticks are formed using the open, high, low, and close of the chosen time period.
Candlesticks are created with all of the information over a given time, the open, the close, the high, and low.
- The candlestick is empty when the close is over the open.
- When the close is less than the opening price, then the candlestick is filled in or black.
- The section of the candle between the open and the close is known as the “real body”.
- The lines above and below the real body are known as the “upper and lower shadows”.
- The top point of the upper shadow is the “high”.
- The lowest point of the lower shadow is the “low”.