Every trader has their own “favorite type” of technical analysis to apply when viewing charts, and that’s great. However it’s been my experience that having only one “go to analysis tool” is generally not enough to get an accurate read on things – technically speaking.
You need to see things from several perspectives and apply your knowledge of at least a couple different methods of analysis in order to make sense of it all.
I follow price action almost exclusively – and have very little in the way of other “indicators” on my charts short of the “Kongdicator” (my proprietary short term tech tool) which “does” essentially follow pure price action.
Japanese candles are a very large part of my “graphical / visual” evaluation of markets action as with a simple glance, one is able to deduce:
- The high of the given time frame
- The low of the given time frame
- The opening price of the given time frame
- The closing price of the given time frame
*and even more importantly – the “difference / variance” in price over time – purely in a visual context.
So when you see a candle ( your eyes get so used to identifying them over time) that suggest to you “hey! in the last 4 hours price has jumped dramatically (or perhaps the inverse) – you take notice!
Google’em – there are piles of excellent websites outlining Japanese Candles – and how to use them!