Continuing the discussion about Japanese candlestick strategies with its history, this time we will review the basic Japanese candlestick patterns.
To learn a more complete version you can get about this candlestick pattern on the candlestick pattern cheat sheet.
But it never hurts us to repeat again, especially about this basic Japanese candlestick pattern.
Why is learning this basic candlestick pattern so important?
Because the candlestick itself reflects market behavior consisting of buyers and sellers.
In a candlestick that represents a certain timeframe, it has provided information which is the most dominant controlling the market.
Whether buyers or sellers so that it forms a bearish or bullish candlestick pattern
TenkoFX broker, a brokerage firm that serves forex traders to trade on the forex, CFD and crypto trading markets, regulated by the International Financial Services Commission (IFSC) of Belize.
A spinning top is one of the basic patterns of Japanese candlestick which has long upper shadow and lower shadow characteristics, with a small real body, either a white body as a bullish candlestick or a black one as a bearish candlestick.
The image below is example spinning tops candlestick
With the characteristics of a small body candlestick, both on a bullish candlestick and a bearish candlestick, this is the distance between the open and close prices.
While the long upper shadow and lower shadow, this provides information that the buyer and seller are opposites to fighting but ends in balance, none of them won
Even though the market session has opened and closed, significantly the price moves to high and low simultaneously.
There are no buyers and sellers who dominate the market.
So it can be concluded that this spinning top pattern is a sign of a standoff.
The Spinning Tops pattern also hints at the possibility of a reversal. Differences only occur when this pattern emerges.
- If Spinning Tops appear when up-trend, this indicates that there are not too many buyers in the market, so it could possible reversal time.
- Conversely, if he appears during down-trend, there are not so many sellers, so it will possible to reversal time.
Read also Trading Style
Marubozu is a candlestick archetype that has the characteristics of a full candlestick body, with no upper shadow and no lower shadow.
The image below is an example of a Marubozu candlestick pattern.
The Marubozu candlestick pattern usually has a long real body, and without any shadows, either above or below the candlestick, open and close prices are the same as high and low prices.
On a bullish candlestick that is usually drawn in white color.
Gives information that the buyer is dominating the market in full force, there is no resistance from the seller.
While bearish candlesticks are usually drawn in black.
This provides strong seller pressure on the market, and there are no resistance from buyers.
If you trade in a Marubozu candlestick, this is a signal of continuation trend, if there is a bullish candlestick then the trend is likely to rise
If there is a bearish candlestick then the trend will likely continue to bearish.
Doji candlestick, this name seems to come from Japanese words
This candlestick has the characteristics, the open price and the close price are on one line so that the pattern of images that are formed as if they do not have a real body.
There are four types of Doji candlesticks, long-legged Doji, dragonfly Doji, Gravestone Doji, and four price Doji, the image below shows of shorts Doji candlesticks
If you find a Doji candlestick pattern on your trading platform
This gives information that there is no certainty between buyers and sellers which are more dominant in putting pressure on market trends, prices move up and down but at close prices end the same or slightly different from open prices.
Because no one is more dominant, it ends in a draw.
If you find a Doji candlestick, pay attention to the shape of the previous candlestick.
If it’s a white Marubozu or a bullish candlestick, then the Doji candlestick implies that buying pressure is starting to weaken.
To push prices higher, requiring larger buyers, but this does not occur, so it only forms a Doji candlestick
But if you find a Doji before a black Marubozu candlestick or a bearish candlestick.
Then it gives a signal that in a bearish trend, sellers start to weaken, needing more sellers to push prices down.
But this doesn’t happen and only forms Doji candlesticks.
While the decline is quite significant, and buyers are waiting to enter.
But to determine this reversal pattern still needs confirmation signals.
Therefore, sharpen our vision after a long black candlestick, if after Doji a white candlestick then appears, this will allow a reversal pattern.
In learning technical analysis, it is very important to understand the basic Japanese candlestick patterns, first and foremost as a foundation, before continuing the next lesson on candlestick charts.
By knowing this basic Japanese candlestick pattern, hopefully, it will provide insight, in conducting forex trading.
At least we can understand the price behavior of various psychological conditions of market participants so as to form certain candlestick patterns.
So that it can be used as a reference in trading.
While we can rest our minds before continuing on in the next chapter that will discuss the single candlestick pattern.