In addition, the length of the candlesticks is also indicative of market behavior. These open and close levels are marked by Japanese candlestick patterns and the highs and lows could act as gauges for when breakouts are taking place. A quick glance at a Japanese candlestick chart could easily show whether bulls or bears are in control, allowing one to determine whether a reversal or continuation of the trend is more likely to happen.Īside from that, the open and close of price action for longer-term charts such as the daily and weekly time frames tend to act as support or resistance for intraday price action.
As discussed in the previous section, one of the best features of using candlestick charts to watch forex price action is that it provides a snapshot of buying and selling pressure. These methods were eventually compiled and improved on by the more popularly known proponent of candlestick patterns, Steve Nison, who published his book entitled Japanese Candlestick Charting Techniques in the early 90s. Munehisa Homma developed this methodology to monitor daily changes in the prices of rice in order to help him make better decisions when it comes to buying or selling the commodity. Candlestick charting originated around the 17th century among Japanese rice traders.
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