Candlestick Chart is a type of chart used in Technical Analysis. Each time division on the chart is displayed as a candlestick – a red or green vertical bar with extensions above and below the candlestick body. The top of the extension shows the highest price for the chart division and the bottom of the extension shows the lowest price. Red candlesticks indicate a lower closing price than opening price, and green candlesticks indicate the price is rising. (www.learnforextrading.co.za)

Japanese candlestick charts are older than bar charts and point and figure charts. Candlesticks are exciting, powerful, and fun. Using candlesticks will help improve your market analysis. Candlestick techniques can be used for speculation and hedging. They can be used for futures, equities, options, or anywhere technical analysis is applied. If we learn deeply, we will discover how candlesticks will add another dimension of analysis.

The Japanese technical are honed by hundreds of years of evolution. Yet, amazingly, we do not know how the Japanese analyze our markets with their traditional technical tool called candlesticks. This is disconcerting if we consider that they are among the biggest players in the financial markets. The Japanese are big technical traders. Knowing how the Japanese use candlestick charts to analyze both our markets and theirs may help us answer the question “What is the Japanese goings to do?”

The Japanese use a combination of western chart and candlestick techniques to analyze the markets. Several terms like “hanging-man lines,” “dark-cloud covers,” and “evening stars” are advance of candlestick chart. I will write it in other articles.