Tag Archives: candlesticks

Combining Fibs with Candlesticks

Combining Fibs with Candlesticks

If you have been having to pay attention at school, you’d know by now you can mix the Fibonacci tool with support and resistance levels and trend lines to produce a simple but super awesome buying and selling strategy.

But we ain’t done yet! Within this lesson, we are likely to train you the way to mix the Fibonacci tool together with your understanding of Japanese candlestick designs that you simply learned in Grade 2.

In mixing the Fibonacci tool with candlestick designs, we’re really searching for thorough candlesticks. If you’re able to tell when purchasing or selling pressure is exhausted, it can provide you with an idea of when cost may continue trending.

We at tradeadvisorpro.com prefer to give them a call “Fibonacci Candlesticks,” or “Fib Sticks”. Pretty appealing, right? Let us have a look at an example to create this clearer.

Here is a 1-hour chart of EUR/USD.

Fibonacci Candlesticks
The pair appears to be in a downtrend the past week, however the move appears to possess paused for a little. Maybe there is an opportunity to obtain this downtrend? Guess what! I know you know what this means.  You’re ready to go ahead and take Fibonacci tool and get the job done!

As you can tell from the chart, we have set our Swing High at 1.3364 on March 3, using the Swing Low at 1.2523 on March 6.

Becasue it is a Friday, you made the decision to simply relax, take an earlier day off, and choose whenever you wanna enter once you discover the charts following the weekend.

Green Candle

Whoa! When you sprang open your charts, the thing is that EUR/USD has increased a great deal from its Friday closing cost.

As the 50.% Fib level held for a little, purchasers eventually required the pair higher. You choose to wait and find out if the 61.8% Fib level holds. In the end, the final candle was pretty bullish! You never know, cost might just keep shooting up!

Fibonacci Candlesticks 2

Well, are you going to see that? A lengthy legged doji has created right smack around the 61.8% Fib level. Should you compensated attention in Grade 2, you’d realize that it is really an “exhaustive candle.” Has purchasing pressure died lower? Is resistance in the Fib level holding? It is possible. Other traders were most likely thinking of getting that Fib level too.

Are you looking to short? You cant ever know without a doubt (and that’s why risk management is really important), but the prospect of a reversal looks really good!

Fibonacci Candlestick End

Should you have had shorted immediately after that doji had created, you might have made some serious profits. Immediately after the doji, cost delayed for a little before heading straight lower. Take a look at all those red candles!

It appears that buyers were indeed pretty tired, which permitted retailers to leap in and seize control. Eventually, cost went completely down again towards the Swing Low. Which was a move of approximately 500 pips! That could’ve been your trade of the season!

Searching for “Fib Stays” can be very helpful, as they possibly can signal whether a Fib level holds.

Whether it appears that cost is stalling on the Fib level, odds are that other traders might have put some orders at individuals levels. This could behave as more confirmation that there’s indeed some resistance or support at this cost.

Another nice factor about Fib Stays is the fact that you don’t have to place limit orders in the Fib levels. You might have some concerns if the support or resistance holds because we are searching in a “zone” and never always specific levels.

This is when you should use your understanding of candlestick formations.

You can wait for Fib Stay with form right below or over a Fib level to provide you with more confirmation on whether you need to place in a purchase.

If your Fib stick does form, you can easily enter a trade at market cost since you have more confirmation that much cla might be holding.

 

Summary: Japanese Candlesticks

Summary: Japanese Candlesticks

Candlesticks

  1. When the close is over the open, a hollow candlestick (usually displayed as white) is attracted.
  2. When the close is underneath the open, a filled candlestick (usually displayed as black) is attracted.
  3. The hollow or filled portion of the candlestick is known as the “real body” or body.
  4. The skinny lines poking above and underneath the body display the high/low range and therefore are known as shadows.
  5. The top upper shadow may be the “high”.
  6. The foot of the low shadow may be the “low”.

Long bodies indicate strong purchasing or selling. The longer your body is, the greater intense the purchasing or selling pressure.

Short physiques imply hardly any purchasing or selling activity. In street foreign exchange lingo, bulls mean purchasers and bears mean retailers.

Upper shadows signify the session high.

Lower shadows signify the session low.

You will find various kinds of candlestick designs, but they may be categorized into the number of bars from the candlestick pattern. You will find single, dual, and triple candlestick formations. The most typical kinds of candlestick designs would be the following:

Candlestick Patterns

Just make reference to the candlestick Cheat Sheet for any quick reference on which these candlestick designs mean.

Mix candlestick analysis with support and resistance levels for the best results.

And lastly, here are a few words of knowledge.

Simply because candlesticks hint in a reversal or continuation, it does not mean it’ll happen without a doubt! You have to always consider market conditions and what cost action is suggesting.

This is actually the foreign exchange market and absolutely nothing is occur stone!

Japanese Candlesticks Cheat Sheet

Have you clicked this link first? When you did, stop reading through at this time and feel the entire Japanese Candlesticks Lesson first!

If you have gone through those lessons, here’s quick one page reference cheat sheet for single, dual, and triple candlestick formations to simply identify what type of pattern you’re searching at when buying and selling.

Proceed and bookmark this site… You don’t need to be shy!

Single

Double & Triple

Double Trouble – Dual Candlestick Designs

Double Trouble – Dual Candlestick Designs

Engulfing Candles

bullish & bearish engulfing pattern

The bullish engulfing pattern is really a two candle stick pattern that signals a powerful up move might be coming. It takes place whenever a bearish candle is instantly followed by a bigger bullish candle.

This second candle “engulfs” the bearish candle. What this means is purchasers are flexing their muscles and which there might be a powerful up move following a recent downtrend or a time of consolidation.

However, the bearish engulfing pattern may be the complete opposite of the bullish pattern. This kind of pattern happens when bullish candle is instantly followed by a bearish candle that completely “engulfs” it. Which means that retailers overpowered the purchasers and which a powerful move lower might happen.

Tweezer Bottoms and Tops

The tweezers are dual candlestick reversal designs. This kind of candlestick pattern could usually be spotted after a long up trend or downtrend, showing that the reversal will quickly occur.

Notice the way the candlestick formation looks as being a set of tweezers!

Splendid!

tweezer tops and bottoms

The very best tweezers possess the following qualities:

  1. The very first candle is equivalent to the general trend. If price is upgrading, then your first candle ought to be bullish.
  2. The 2nd candle is opposite the general trend. If cost is upgrading, then your second candle ought to be bearish.
  3. The shadows from the candles ought to be of equal length. Tweezer tops should have a similar highs, while tweezer bottoms should have a similar lows.

Basic Candlestick Patterns

Fundamental Candlestick Patterns

Spinning Tops

Candlesticks having a lengthy upper shadow, lengthy lower shadow and small real physiques are known as spinning tops. The colour from the real body is not so important.

The pattern signifies the indecision between your purchasers and retailers.

spinning tops

The little real body (whether hollow or filled) shows little movement from open to close, and also the shadows indicate that both purchasers and retailers were fighting but nobody could gain top of the hands.

Despite the fact that the session opened up and closed with little change, prices moved considerably greater and lower, meanwhile. Neither purchasers nor retailers could gain top of the hands, and also the result would be a standoff.

If your spinning top forms throughout an uptrend, this results in there are not many purchasers left along with a possible reversal in direction could occur.

If your spinning top forms throughout a downtrend, this only means that there are not many retailers left along and with a possible reversal in direction could occur.

Marubozu

Seems like some type of witchcraft, huh? “I’ll cast the evil spell of the Marubozu onto you! Fortunately, that isn’t what it really means. Marubozu means you will find no shadows in the physiques. Based on whether the candlestick’s is filled or hollow, the high and low are the same as its open or close.  Take a look at the kinds of Marubozus within the picture below.

marubozu

A Whiten Marubozu consists of a lengthy white body without any shadows. Outdoors cost equals the reduced cost and also the close cost equals our prime cost. This can be a very bullish candle because it implies that purchasers were in charge the whole session. It always becomes part one of the bullish continuation or perhaps a bullish reversal pattern.

A Black Marubozu consists of a lengthy black body without any shadows. The open equals the high and also the close equals the reduced. This can be a very bearish candle because it implies that retailers controlled the cost action the whole session. It always suggests bearish continuation or bearish reversal.

Doji

Doji candlesticks have a similar open and open cost/price or at best their physiques are very short. A doji should possess a small body that seems like a thin line.

Doji candle lights suggest indecision or perhaps a struggle for turf positioning between purchasers and retailers. Prices move above and underneath the open cost throughout the session, but close at or very close to the open cost/price.

Neither purchasers nor retailers could gain control and also the result was basically a draw.

You will find four special kinds of Doji candlesticks. The size of the lower and upper shadows can differ and also the resulting candlestick appears like a mix, inverted mix or plus sign. The term “Doji” describes both singular and plural form.

types of dojis

Whenever a Doji forms in your chart, pay special focus on the preceding candlesticks.

If your Doji forms after a number of candlesticks with lengthy hollow physiques (like White Marubozus), the Doji signals the purchasers have become exhausted and weakening. To ensure that price to carry on rising, more purchasers are essential but there’s not any longer! Retailers are licking their chops and therefore are searching to come in and drive the cost down again.

long white candle doji

If your Doji forms after a number of candlesticks with lengthy filled body (like Black Marubozus), the Doji signals that retailers have become exhausted and weak. To ensure that cost continues to fall, more retailers are essential but retailers are all drawn out! Purchasers are foaming within the mouth for an opportunity to go into cheap.

long black candle doji

As the decline is sputtering because of insufficient new retailers, further purchasing strength is needed to verify any reversal. Search for a white candlestick to shut over the lengthy black candlestick’s open.

Within the next following sections, we’ll have a look at specific candlestick formations and what they’re telling us. Hopefully, throughout the end of the lesson on candlesticks, you’d understand how to recognize candlestick patterns & create decisive buying and selling choices according to them.

What is a Japanese Candlestick?

What Exactly is a Japanese candlestick?

Since we have briefly covered candlestick planning analysis in the earlier lesson, we’ll now search inside a little and discuss them more in depth. Let us perform a quick review first.

What’s candlestick Trading?

In older days when Godzilla was still being an adorable little lizard, Japan produced their very own old-fashioned sort of technical analysis to trade grain. You heard right, grain.

A westerner through the title of Steve Nison “discovered” this secret technique known as “Japanese candlesticks”, learning it from the fellow Japanese broker. Steve investigated, analyzed, resided, breathed, ate candlesticks, and started to create about this. Gradually, this secret technique increased in recognition within the 90s. To create a lengthy story short, without Steve Nison, candlestick charts may have continued to be a hidden secret. Steve Nison is Mr. candlestick.

So what are foreign exchange candlesticks?

The easiest method to explain is to apply an image:

candlestick

Candlesticks can be used as any time period, may it be eventually, 1 hour, 30-minutes – anything you want! Candlesticks are utilized to describe the cost action throughout the given time period.

Candlesticks are created while using open, high, low, and close from the selected period of time.

  1. When the close is over the open, a hollow candlestick (usually displayed as white) is attracted.
  2. When the close is underneath the open, a filled candlestick (usually displayed as black) is attracted.
  3. The hollow or filled portion of the candlestick is known as the “real body” or body.
  4. The skinny lines poking above and underneath the body display the high/low range and therefore are known as shadows.
  5. The top upper shadow may be the “high”.
  6. The bottom of the lower shadow may be the “low”.