What is the Japanese Candlestick Chart Pattern Analysis?

Analyzing charts is one of the skills you need to learn as a forex trader. The most popular Japanese candlestick chart is for graph analysis. This almost lowers the West bar chart and graphs points and numbers to the history page. Even new modifications such as the range and bar chart of Renko have not yet gotten the level of popularity received by Japanese candlestick charts. Japanese candlestick charts give you more information about prices that have been made during certain trading periods. With its color code and easy-to-see patterns, you can see what's happening on the market quickly.

History of Japanese Candlestick Chart

As the name suggests, the Japanese candlestick chart is from Japan. 18th-century Japanese rice traders used it to track changes in rice prices. It was then imported into different market technical analyzes.

Japanese Candlestick

Japanese candlesticks clearly indicate open, low, high, and closed prices for a specified period of time. It has a body, lower axis/shadow, and upper axis. The body is between open prices and closing prices. The bottom and top axes are between open or closed prices and low or high prices, depending on the direction of the candle.

It has a color code that can be adjusted for the direction of the candle. Bear candle (down) is when the closing price is below the opening price. Bull candles (above) are when the closing price is above the open price. You can choose the color you want for directions but green or white is usually used for rose candles while red or black is used for candle drops.

Why is the Japanese Candlestick Chart? 

• Japanese candlesticks are easier to interpret and easier for you to know graph analysis.
• Candle holders are easier for your eyes because they immediately adapt to the information on the graph.
• With the color code, you can easily see the direction of prices.
• Candlestick patterns have cool names like hammer, doji, etc., which you can remember easily.
• They show you potential market reversal points where prices have the potential to change from a downward trend to an uptrend and vice versa.

Japanese candlestick chart pattern

You will see many candlestick patterns. In general, they are classified as single candlestick patterns, two candlestick patterns, and three candlestick patterns.

Single candlestick pattern

Hammer

The hammer has a small body at its upper end, the bottom axis is very long and has little or no upper axis. This occurs after the downtrend/decline and has a bullish significance.

Hangman

Hangman has a small body at its upper end, the bottom axis is very long and has little or no upper axis. This happens after an uptrend/rally and has bearish implications.

Shooting star

Falling stars have a small body at the lower end, the upper axis is very long and there is little or no bottom axis. This happens after an uptrend/rally and has bearish significance.

Inverted hammer

The upside down hammer has a small body at its lower end, the upper axis is very long and there is little or no bottom axis. This occurs after the downtrend/decline and has a bullish significance.

Doji

Doji has little or no body because the price is closed almost where it is opened. This signifies doubt.

Marubozo

Spinning top has a small body in the middle with almost the same upper and lower axes. This signifies doubt.

Marubozo

Marubozo has a large body with little or no axis at both ends. It looks mostly on the strong trend market.

Two candlestick patterns

Bullish Engulfing

Large bullish candles actually consume the previous bearish candle in a downtrend. This has a bullish significance.

Bearish engulfing

Large bearish candle fully consumes the previous bullish candle. This happened after a prolonged uptrend/rally. This has a bearish significance.

Piercing

This happens after a strong downtrend. A series of bearish candles closed with a large bullish candle which opened below the previous candle low but was forced to close above the midpoint of the candle.

Dark cloud

That happens after a strong uptrend. A series of bullish candles closed with a large bearish candle that opened above the previous candle high but was forced to go down to close below the midpoint of the candle.

Tweezer

These are two consecutive candles with identical lows occurring after the downtrend or two consecutive candles with identical highs occur after the uptrend. They signal the final potential of the trend.

Harami

This can be seen after the up or downtrend. The current candle range is located fully within the range of the previous candle. This can indicate a potential price reversal.

Three candlestick patterns

Morning star

They are seen after an extended down/downtrend. The first candle is a large bearish candle, the second candle is a small candle with a gap from the first candle, and the third candle is a large bullish candle. They have bullish implications.

Evening star

They are seen after an extended uptrend/rally. The first candle is a large bullish candle, the second candle is a small candle with a gap from the first candle, and the third candle is a large bearish candle. They have bearish implications.

Morning doji sStar

They are like a morning star pattern except that the second candle is a doji candle.

Evening star doji

They are like a night star pattern except that the second candle is a doji candle.

Three white soldiers

They are three consecutive large bullish candles after moving down. They are mostly seen as a downward trend in retreat.

Three black crows 

They are three consecutive large bearish candles after rising. They are mostly seen as a pullback in the upward trend.

Another tool that can strengthen the analysis of your Japanese candlestick chart patterns 

• Support / resistance zone
• Fibonacci retracement and extension level

Important Japanese candlestick patterns that occur in important support/resistance zones or Fibonacci levels carry more significance. In conclusion, the analysis of the Japanese candlestick chart pattern has made it easier for you to do a price action analysis. At a glance, you can easily understand the message of price action if your eyes are trained.

How to Choose a Forex Broker?
TopAsiaFx.com helps you compare and choose your preferred Forex Broker. We suggest keeping the following checklist in mind when making your decision:

• Is the Forex Broker regulated?
• Account Details: Ideally, your broker should offer either a selection of account types or some element of customizability. Competitive spreads and easy deposits/withdrawals are good indicators too.
• Number of Currency Pairs offered: The variety of currency pairs on offer, as well as the quantity, should be considered (the more of both, the better).
• Availability of Customer Service.
• Quality of the Trading Platform: look for a platform that is easy to use, straightforward and offers a collection of technical and analytical tools to enhance your trading experience.

Rank	Broker Name	Special Offer	Minimum Deposit	Spread	User Score	Maximum Leverage	Regulation	Start Trading
1	NordFX	55% Deposit Bonus	$10	0.0 Pips	96	1:1000	VFSC	Open Account
2	SGT Markets	Refer a friend $10	$500	0.0	95	1:400	IFSC	Open Account
3	OctaFX	50% Deposit Bonus	$100	0.4	94	1:500	IBC	Open Account
4	Exness	No	$1	0.1	93	1:2000	FCA,CySEC,IBC	Open Account
5	IC Markets	No	$200	0.0	92	1:500	ASIC	Open Account
6	Tickmill	$30 Welcome  Account	$100	0.0	91	1:500	FSA,FCA	Open Account
7	Axiory	$50 Deposit Bonus	$200	0.0	90	1:400	IFSC	Open Account
8	Justforex	100% Deposit Bonus	$1	0.0	89	1:3000	IFSC	Open Account
9	ThinkMarkets	No	$250	0.4	88	1:400	ASIC,FCA	Open Account
10	XM	$30 Welcome Account	$5	0.0	87	1:888	ASIC,FCA,IFSC	Open Account
11	FBS	$50 Welcome Account	$1	0.0	86	1:3000	IFSC	Open Account
12	HotForex	No	$5	0.0	85	1:1000	INC	Open Account