Forex candlestick technique can be called a revolutionary invention and standout among a lot of similar creations.

It originated in Japan in the 18^th century and was used by rice traders of the country in those times.

The technique encompasses some kind of an oriental charm and has precision with wisdom.

To the Forex trading world the candlesticks trading technique came as a boon and the name associated with its introduction is that of Steven Nison whose book on the candlestick techniques highlighted the use of the techniques in the present day form.

What is a candlestick technique?

This technique is a representation of data in various charts in the form of various patterns. Creating a candlestick pattern requires a set of data containing different positions such as open, close, high and low.

Now a candlestick will be formed in the shape of a main body and two extensions which emerges out of the body in the form of tails.

The candlesticks pattern generally provides information which is somewhat similar to any other methods of interpretation used in the Forex trading methods. But there is something more to it in the way it is being presented and is very pleasing and is more than useful than any other such charts.

Pros and cons of Candlesticks technique

Pros

1. The candlesticks technique displays a more apparent relationship between the four major points which goes to make a particular pattern. Just one simple glance will make the traders know the underlying price action which is being projected by it.

2. There are far more certainty involving the interpretation predicting a price action in case of candlesticks technique which supersedes the other such techniques used in Forex.

Cons

The candlesticks technique cannot predict the volatility of the price actions during different trading stages

How do the candlesticks make it possible?

Now there are various useful signs by which the candlesticks actually do the trick. Say for example, if you see a green colour candlestick which lasts long will signify a bullish market signalling very active buyer participation. Contrary to that a red candlestick which lasts long indicates a bearish market with active seller participation.

Doji is another of the special candlestick signs which indicates a match between the market opening and closing price. Doji sign has a dragonfly variant wherein there is a match of the prices at the extreme top of the trading range and is an indication of some kind of a reversal in the trend and an approaching upward advance.

Furthermore, there is another sign known as the piercing line in which the charts are represented by a green bar whose closing price point is slightly above the midpoint of the previous red candlestick. This is to indicate an approaching downward trend reversal.

There are a lot of traders who consider this candlestick technique as the ultimate in the field of Forex trading technical analysis.

Forex candlesticks technique is surely a far more reliable one compared to many other technical analysis but traders should always be cautious and must not be content with just one method.

For more information about trading with candlesticks click here