Japanese Candlesticks Part 1
[00:11] – Welcome to Reading Japanese Candlesticks Part 1. This is Video Number 5 in our forex trading training series, brought to you by ForexMinute.com. Japanese Candlesticks are a huge assets to any financial trader. They provide a strong insight to price action and they can act as signal to open and close positions in financial market, such as the forex market. And in coming videos, I will to teach you about these signal and just how powerful they are and you will soon realize the benefits of Japanese Candlesticks and been able to read Japanese Candlesticks.
We can combine Japanese Candlesticks with price behaviors which I covered in Videos 1 to 4. We will have a very strong technical analysis and trading foundation but please be patient with yourself as with any skill, it will be going to take time and dedication to learn.
[01:19] – Japanese Candlesticks! All Japanese Candlesticks have an open and close and the difference between the open and close created the candlestick body. So this candlestick has opened here and price has closed higher and created a candlestick body. If price closes higher than the open then we have a bullish candle or an upwards candles and of price closes lower than the open, then we have a bearish candle or a downwards candle.
Each candlesticks represents price movements within an allocated time. Since we have a five minute price chart then each candlestick will represent five minute of price movement. If we have a 30 minute price chart, then each candle will represent a 30 minute of price movement. Meaning between the open and close candle, 30 minute of time would have passed.
Generally the next candle opens where the previous candle close. There are some exceptions to that, we’ll cover them later in the course. Japanese Candlesticks also have wicks. Candlesticks wicks give additional detail to price movement over the period of the candle. So if we look at this first candle, we have an upper wick; we have a wick above the body. On second candle has an upper and lower wick – the lower wick being below the candle body. Since we look at this first candle price opened here, and closed here so we have a bearish candle. But the wicks act as a footprints of where price was during the duration of the candle. So price was up here, at some point during the candle since it was a daily chart. At some point during the day, price was up here but closed down here. And because price was up here, we have a mark left on our candle which is the wick.
On our second candle, price is opened where the previous candle closed. Price was down here, and price was up here but closed here. So once again our wicks have acted as a footprint or a recalling of where price was during the duration of the candle.
[04:11] – Now to help you understand Japanese Candlesticks better, let’s look at real life price chart. This is a 30 minute chart of a Euro US Dollar. Each one of the candle represents 30 minute of price data or price movement. If we zoom in we can get a better look at this candle. So let’s take that first candle. Price is opened here where the previous candle closed, and the price closed here creating a bullish candle.
We also have an upper wick so price was up here during the duration of the candle but has come back down and closed here. Our next candle has opened where the previous one closed. Price was up here but closed here. Our next candle opens here as closed here but walls down here coz we have a lower wick.
With this next candle, price opened here and moved very slightly on the downside and closed here and we have an upper and a lower wick. Let’s look at a live price chart now to display a Japanese Candlesticks in action. It currently is the evening of the European markets. There is a very little movements in the EUR/USD. Let’s go to the Dollar Japanese Yen, we can go to 1 minute chart and you should see a lot of price movements any you should see a Japanese Candle body and wick being formed.
[06:10] – In case that candle just closed, let’s watch the price movement of this next candle. You will notice the candle leaving a wick as it moves down. And now we have it!
To summarize, Japanese Candlesticks have bodies and wicks; Candlesticks can either be bullish or bearish, upwards or downwards. In coming videos I will show you how Japanese Candlesticks can act as signals to open and close positions within financial markets. And we will start doing that in the next video, which is reading Japanese Candlesticks Part 2.
As always thank you for watching this video, and please watch more.