Chapter 8
Redrawing the Price Bar: Japanese Candlesticks
IN THIS CHAPTER
Introducing candlesticks
Going over a few specific patterns
Using candlesticks with other market tools
Candlestick charting displays the price bar in a graphically different way from the standard bars described in Chapters 6 and 7. Candlestick charting was developed in Japan at least 250 years ago in the 18th century, where traders applied it to prices in the rice market.
A trader named Steve Nison brought candlesticks to the attention of western traders in 1990. Candlestick patterns became instantly popular because they embody the principle of imputing trader sentiment to the bars, as in “shaven top,” where the close is at the high. As I say in Chapter 6, the close at the high means strong bullish sentiment. Today every software program offers to display bars in the conventional way or in candlestick format. Trading guides abound on how to use candlesticks. Steve Bigalow has several books on candlestick trading (and software add-ons), including Profitable Candlestick Trading and High Profit Candlestick Patterns (both published by John Wiley & Sons, Inc.).
In this chapter, I break down the components of a ...
Get Technical Analysis For Dummies, 4th Edition now with the O’Reilly learning platform.
O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.
