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Thread: What is a candlestick and how to analyze market movements with a candlestick?

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    Rookie Azis Muslim's Avatar
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    What is a candlestick and how to analyze market movements with a candlestick?

    Hi guys: hi:

    First of all, I thank you for all the staffs at RoboForex forum for organizing this extraordinary contest. I am very fortunate to be one of the clients here and become a member of this forum by sharing all of my experience from my early career started in forex till now.

    As we know in general, for a beginner it is very difficult to do this business because they do not know many things about this business. Beginners usually have some questions for them and they're trying to get the answer. As traders who have struggled and fought for years, we here should help them to find some solutions of their problems. Of all the important things about forex, I will personally explain 2 questions for the beginners based on my own story.

    1. What is a candlestick and how to analyze market movements with a candlestick?
    Candlestick is one of three charts available in metatrader4 which has a shape like rod - candles. Candlestick also can be used as a technique to map and read the price movements of stocks, commodities and forex. This technique belongs to a group of technical analysis and it is the oldest technique created by Munehisa Homma (Japan, 1724-1803).

    It is far easier to read candlestick's pattern than reading the price through bar charts and line charts. We can adjust the color of the candles, for example red color for bearish candles and green one for bullish. I will describe 2 patterns, they are bearish and bullish.

    a) Bearish Patterns
    If we look at some of the patterns below, it is a sign the market will move to follow the trend of bearish or declining. The patterns consists of:
    Bearish III, Bearish Harami and Cross, Dark Cloud Cover, Bearish Engulfing Line, Evening Doji Star, Evening Star, Gravestone Doji, Bearish Separating Line, Evening Window Star, 3 Bullish Soldier, Inverted Hammer, Shooting Star, Long Upper Shadow, Tweezer Tops and Hanging Man.

    b) Bullish Patterns
    If we look at some of the patterns below, it was a sign the market will move to follow the trend bullish or ascending. The patterns consists of:
    Bullish III, Bullish Harami & Cross, Piercing Line, Bullish Engulfing Line, Morning Doji Star, Morning Star, Dragonfly Doji, Bullish Separating Line, Morning Window Star, On-Neck Line, 3 Bearish Soldier, Inverted Hammer, Long Lower Shadow, Tweezer Bottoms, and Hammer.



    In addition, I would add some patterns that provides excellent results when I was trading using this technique about 1 year ago. Check this out.




    2. How to determine a suitable time for trading and what is market hour?
    Each time has different value of movements, depending on how many market participants were active at that time and the extent of the ongoing economic activities. Some countries have peak hours each of which affects the movement of its currency. For traders who likes a busy time, a suitable time is when economic activity is underway which led to high price volatility. While traders are more relaxed, they will choose a time when all activities reduced economic activity which caused sideways in the market.

    I think you got the answer, right mate? Yes, everything depends on our trading styles. For example, if we are scalper, we will trade in rush hours when market moves in high volatility. Here's the picture about market hour.




    I think that's all from me. If there is any error in the explanation of what I wrote and explained above, I apologize to you. Everything I shared here based on my experience and am still in the learning process. Because for me, learning is an endless process in my life. Thank you for your attention mate. Hopefully this can help the beginners to know this forex business well.

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    Quote Originally Posted by Sascha View Post
    i'm not ranging them into specific accuracy because everything depends on market current volatility and trend. if we're following the patterns, let me choose the example with shooting star. when we use it in sideways market then we won't get any clue because market won't change its trend because it's still on sideways. need more confirmations from different technique and patterns to make sure the other strategies we have are supported.
    Hahaha, don't know, why you are not agree on my statement that candlestick patterns are 50% without any proper analysis. I am saying that because, I read this statement from many books which are totally based on candlestick patterns and patterns. in my opinion when market will be in sideways we have need to stay away from the market.

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  3. #552
    Rookie Azis Muslim's Avatar
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    Quote Originally Posted by letsdo View Post
    Hahaha, don't know, why you are not agree on my statement that candlestick patterns are 50% without any proper analysis. I am saying that because, I read this statement from many books which are totally based on candlestick patterns and patterns. in my opinion when market will be in sideways we have need to stay away from the market.
    Have not found anything in details with books, that is why I always learn from others through their theories, suggestions, and strategies. Many books I read about candlestick patterns are so common which always explain things in general. We know most basic things about Forex but we need to find more explanation and example to find and use the patterns to trade.

    The percentage of accuracy changes with candlestick patterns when market is on different volatility. You are right that sideways is the moment where market will give many wrong patterns and price will remain in average level. With EUR/USD I usually trade and calculate its daily movement in 40 pips in sideways.

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    This is a good overview of candlestick patterns and this is one among the threads that discusses on candlestick patterns in a way that a newbie will easily understand so , great appreciation to "Aziz Muslim". Candlestick pattern is the bedrock or premises where price action trading evolves and a good mastery of it can help a trader improve greatly on how he trades most especially when combined with support and resistance levels .

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    Quote Originally Posted by layigold View Post
    This is a good overview of candlestick patterns and this is one among the threads that discusses on candlestick patterns in a way that a newbie will easily understand so , great appreciation to "Aziz Muslim". Candlestick pattern is the bedrock or premises where price action trading evolves and a good mastery of it can help a trader improve greatly on how he trades most especially when combined with support and resistance levels .
    There are just so many of them and I like to keep the trading strategy I am making use of as simple as possible. Been making use of the candle stick so much, it is the best use and method the trader can make money. I use the engulfing bar, it is the best trading candle stick pattern I have learned. On the other hand, it though depends on the time frame we are using it on.

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    Quote Originally Posted by Azis Muslim View Post
    Have not found anything in details with books, that is why I always learn from others through their theories, suggestions, and strategies. Many books I read about candlestick patterns are so common which always explain things in general. We know most basic things about Forex but we need to find more explanation and example to find and use the patterns to trade.

    The percentage of accuracy changes with candlestick patterns when market is on different volatility. You are right that sideways is the moment where market will give many wrong patterns and price will remain in average level. With EUR/USD I usually trade and calculate its daily movement in 40 pips in sideways.
    How you can say that we cannot learn advanced knowledge of Forex trading from books reading. I think maybe you read books which are available in the market free of cost. So dear, come on the right track because without cost we cannot learn advanced things of this business we have need to pay something to learn something.

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    Rookie Sixteen's Avatar
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    The candlesticks pattern remains one of the very best way of trading forex. These study of this pattern will help us understand so much about it and how we could as well get to manage our trade in a more profitable means. These pattern are so helpful and to ensure you are making the best entry and exit point in forex, you need to know how to follow this pattern on the very appropriate level. It's been a good way to trade forex and I have try to see I can earn very well by proper analysis of this candles.

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    Candlestick pattern is what they called price action pattern, they trade nakedly without the use of the forex indicators on them, this will give traders better clarity on their forex analysis. As easy as this trading strategy is, most traders are not trading it, they are only like to trade with forex indicators that are the major cause of confusion for traders.

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    Quote Originally Posted by ola4real View Post
    Candlestick pattern is what they called price action pattern, they trade nakedly without the use of the forex indicators on them, this will give traders better clarity on their forex analysis. As easy as this trading strategy is, most traders are not trading it, they are only like to trade with forex indicators that are the major cause of confusion for traders.
    Yes dear, you are right all candlestick patterns are also called price action trading strategies. Because price action is also called candlestick and candlestick called price action. Price action is a most used trading style in the market at this moment because, the risk reward ratio of price action is more than an indicator base strategy.

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    Quote Originally Posted by letsdo View Post
    Yes dear, you are right all candlestick patterns are also called price action trading strategies. Because price action is also called candlestick and candlestick called price action. Price action is a most used trading style in the market at this moment because, the risk reward ratio of price action is more than an indicator base strategy.
    Price action is not only the use of candle stick, but price action is also consisting of the use of candlestick and then the understanding of support and resistance, those are what that makes a price action trading, also, the trader also needs to know how they can make use of some support indicators if they choose to. But price action is mainly support and resistance.

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