Every professional trader who respects himself can analyze candlesticks. This skill is guaranteed to allow you to reach a new level of development in trading. This skill is on the same level of importance with technical analysis.
The main idea of the approach is to find on the chart a combination of candles that are similar to each other externally and cyclically repeated. These clusters are called candlestick patterns (patterns or formations). One such figure may include 1, 2, 3 or even more elements.
There is a wide variety of formations. Here are the most interesting names:
- “abandoned baby”;
- “evening Star”.
Patterns are also classified by type of signal – there are models of reversal and continuation.
The analysis of candles is recommended to use on daily timeframes. To improve the reliability should use weekly and monthly schedules. Having mastered the basic concepts of the methodology, you can appreciate a number of advantages:
- the ability to accurately determine the place of correction;
- accurate detection of trend reversal;
- opening deals with jewelry accuracy.
Remember that it is better to use Japanese candles selectively. Not every trading strategy is suitable for this.