There are many different types of charting methods. Of all the available types, Japanese candlestick charts are by far the best charting method when swing trading. Understanding price action through Japanese candlestick formations allows you to know in advance what the market may do. They are used by major players in markets all over the world and there is no reason why you shouldn’t also be using them in your trading.
By understanding candlestick formations, you are essentially reading the sentiment of the market. What could be better than being able to glimpse into the minds of the traders in the market and potentially knowing what is going to happen next. The Japanese candle stick formations described below can help you to identify possible reversal or major turning points within the market.
While there are a wide variety of Japanese candlestick formations, the ones of major importance are:
These formations are all reversal formations. Being able to identify turning points in the market is what swing trading is all about. A word of warning though. These reversal patterns only warn of a potential change in the direction of price. This may mean that price will reverse, or stall and continue in the same direction or stall and go sideways.
Comments on this entry are closed.