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7 Simple Strategies of Highly Effective Traders by Alpesh B. Patel, Paresh H. Kiri

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Strategy 7. Japanese Candlesticks

Introduction

Japanese candlesticks have a long history, with over 400 years of use in the Orient. The technique is not complicated, even though it was created for use in markets that would be unfamiliar to traders today.

Rice farmers in Japan would plot the movements of rice prices using candlesticks. They discovered that particular patterns of candlesticks occurred before certain types of price moves. The patterns enabled them to discover that human psychology played an important part in the way people behave and the way prices move. This began a strong desire to make future price predictions by looking only at price movements as depicted by candlesticks.

In this chapter we will look at common candlestick ...

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