Power of Candlestick Charts

How price action in the markets is recorded and traded using candlestick charts.

For effective technical analysis, market “price” is depicted in trading charts. There are various types, but the two most widely used are the candle and bar charts. (word of caution - never trade candle signals on their own!)

All traded market price action is comprised of Open, High, Low and Close.

Technical analysis is the study of charts applied to analyse and predict with the highest probability future price moves.

Without technical analysis and the proper application of it, trading to a certain extent would amount to gambling. (I said “trading” not “investing”)

So where do we start?

I am not going to bore you by going through the whole hog of technical analysis as it is so vast a subject.

I am going to focus on helping you understand my chart setup and the few indicators that I utilise in my simple but powerful trading strategy.

First and foremost I use candlesticks in my trading.

Candlesticks were introduced to the west by a trader called Steve Nison; he is an authority on the subject and has written many excellent books.

I would highly recommend Steve’s books, especially if you are new to this subject.

Candlesticks give excellent reversal signals, but these must never be traded on their own, further confirmation is always necessary! I find using western technicals with candlesticks to be a very powerful combination.

Candlesticks give a clearer visual picture of the underlying market strength of the “bulls and bears”… in other words “buyers and sellers”.

The following are some must know popular and important candlestick formations shown embedded in these charts... click here.

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