Japanese Candlesticks chart is the most commonly used chart of traders around the world. And if you want to master this type of graph, you must fully understand the meaning of each candlestick created from the price. In this article, we will help you understand the meaning of each candlestick you see
How is Japanese Candlestick or Candlestick created?
On the path of price, fluctuation within a certain time frame will create 1 candlestick. At Olymp Trade, the volatile time to create a candlestick can be 1 minute, 10 minutes, 1 hour, 4 hours … You can actively create time frames to make the candlestick.
Japan Candlestick is created from the opening price and the closing price. How the price moves in a time frame is not important. What important is how the price opens and closes will create such suitable candles.
The structure of a candlestick in Olymp Trade
The body of the candlestick is the largest component colored to represent the increase or decrease of price. The candlestick shadow is 2 small sticks above and below the body of the candlestick.
The top of each candlestick corresponds to the highest (HIGH) and the lowest (LOW) in a period of time that creates candles. The lower shadow is called the lower shadow. The upper shadow is called the upper shadow.
At Olymp Trade, if the closing price is higher than the opening price, you will see a green candlestick. On the contrary, if the closing price is lower the opening price, you will see a red candlestick.
Candlesticks appear regularly when trading at Olymp Trade
Long, even extremely long candlestick
This candlestick pattern occurs when there is a relatively large fluctuation in the candlestick creating period, which makes the closing and the opening price is very different. Pro traders often call these types of candles as Marubozu
When playing Olymp Trade, you must pay attention to these candlesticks. If the candlestick is too long, it is possible that the market was very volatile at the time. It is most likely because the related news of a pair of currency or the pair of assets you are trading are out. You have to pay attention to plan the proper tactics
Short candlestick pattern
When the difference between the opening and closing price is small, the market will create a short candlestick at that time. A short candlestick sample that you most often see is called Spinning Top. It has a short body but the tail is quite long, which shows a neutral and unclear state of the current market
Doji candlestick patterns
Doji in Japanese means no changing. So the Doji candlestick is a case of the opening price and closing price almost unchanged.
Meaning of Doji candlestick:
In the time of making the candlestick, neither of the buying side or the selling side has control of prices. The appearance of Doji candlestick is often a sign that the market is leveling off
There are 4 types of Doji candlesticks you often encounter such as Regular Doji, Long-legged Doji, Doji Dragonfly, Doji Gravestone.
Doji are often like a small “+” mark, which shows that during the period of making candlesticks, the increase and decrease of price is not significant
Long-legged Doji. Opposite to regular Doji, during the time of making candlestick, the price increases and decreases continuously. But the result is the closing price coinciding with the opening point
Dragonfly Doji appears very often in support areas. After opening, the price is pushed down to create a downward momentum. But it touches the support. Then buyers start joining and pull the price up. And in the time of making candlestick, although the price falls sharply, the candlestick returns to its original state when closing, which creates a Doji with a long lower shadow.
Gravestone Doji is in contrast to Dragonfly Doji. This type of Doji often appears in resistance areas. The buyers prevail, want to beat the resistance. But the sellers kick the price back initially, which creates a gravestone candlestick with a long upper shadow
Hammer pattern candlesticks
Have you ever heard of names like Hammer candlesticks and Inverted Hammer candlestick or Hanging Man candlestick, Shooting Star candlestick (meteor). Basically, these candles are quite similar.
The common point of all four candlesticks above is: the tail of the candlestick is at least double its body, the longer the better. The body will focus all on the upper or lower of the candlestick.
Hammer candlestick or Hanging man
Hammer candlestick or Hanging man’s shape is exactly the same. They are distinguished by their appearing location. When the price falls, creating a candle like a hammer plugged in the ground will be called a hammer candlestick. When the price increases, a candlestick is created that will be called Hanging man because it’s like a man hanging from the ceiling.
Inverted Hammer and Shooting Star candlestick
Although these two candlesticks also have the same position, they are the reversal version of 2 candlesticks above. At the same time, the reliability of Reverse Hammer and Shooting Star is not much.
These are candlestick patterns you must know if you are a trader based on Japanese candlesticks chart. By understanding all these candlestick patterns, you will feel the path of the price in Olymp Trade.
By the way, combining many candlestick patterns together, you will create a very reliable candle model. This is one of the most favorite methods when playing Olymp Trade too.
Try to feel the candlestick at Olymp Trade. By registering a Demo account here.