Japanese Candle Sticks – Get To Know Them

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┬áproprietary 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!

7 Responses

  1. tio July 4, 2013 / 7:02 pm

    so quiet .. emm still got 3 % while AUD/USD go down then up, while USDX down up down up. Bumpy road indeed. Congrat for whoever celebrate independence day.

    • Pot Stock Watch July 4, 2013 / 8:07 pm

      Yes it’s craaaaazy out there and tomorrow will bring even more craziness!

      Go easy…..let the news hit – then let the market settle / retrace / find it’s footing.

      USD has now almost retraced 100% of the last major down move – UNREAL!

      • tio July 4, 2013 / 9:22 pm

        .. thanks for remainder.. find myself lucky to find your blog sir

  2. Alex Red July 5, 2013 / 1:37 pm

    Dollar very strong. Any signals from the Kongdicator? I supposed if you determine your thesis is wrong, you will get out?

    • Pot Stock Watch July 5, 2013 / 3:10 pm

      Hi Alex.

      He he he……it’s funny as…….very strong dollar “spike” indeed – but against what? NZD now only at the bottom of the range as well AUD and CAD virtually flat so……we need to be careful here.

      If you’ve only been trading EUR then you get wacked! Even that….looks to have hit suppport from months running.

      So! I’m looking to just add. It’s far too late to consider switching teams.

    • Pot Stock Watch July 5, 2013 / 3:25 pm

      Alex – we’re not on the Kongdictor now as – I usually manage to stay out of sideways action, but in this case – entered trades ( so small it didn’t matter ) all knowing this might happen ( as per prior posts outlining several possible outcomes ) and then “bang in your face!” an even larger “unexpected” move in the wrong direction so……this does happen from time to time – hence trading small during these volatile times.

      If it helps pull a chart of /es SP500 futures and check a 4h – the market has only rallied up to the very obvious downward sloping trendline so…..if correlations still hold – I can’t see any reason to worry at present.

      We don’t “bet farms” – we “buy” farms!

    • Pot Stock Watch July 8, 2013 / 4:00 pm

      Alex!

      Im checkin in on you! How you making out?

      A pretty positive “day” for those still of the mindset USD is making a turn lower…

      I hope you’re postions are alright.

Leave a Reply