How to Read Candlestick Charts

how to read a candlestick

One way to analyze technically is to read candlestick chart. According to technical analysis, from data provided candlestick that has formed, we can predict what the next candle will be formed. Is candle Candle Up or down. So if we have an idea of what the candle is formed, we can make a decision whether to buy or sell.

So, Here's how to read a candlestick chart:

In Psikology, candle formed due to the pressure of sales and impulse purchases. The big difference kenanan and encouragement is what then causes the candlestick shapes different from each other.

Chronology candlestick formation:

- When there are many buyers who make purchases, thus increasing the market price at the end of the period the market closes above the opening price, eventually forming candle Up (green).
The amount of impulse buying could be measured from market movements from Low to Close. The greater the motivation, the greater body candle is formed. So that the magnitude of this green candle body indicates the dominance of the buyer.

- When many traders who make a sale, the market price fell, so that by the end of the closing market value peiode usually below the opening price. This condition causes the red candle formed (down).
At the candle down (red) pressure measured sellers from High to Close. The greater the pressure the sale, then the price will fall further and further forming a long red candle body. So that the magnitude of this red candle body indicates the magnitude of the dominance of the seller.



To determine the direction of the next candle, there are some that need to be noticed. namely:
1 Resistance
2 Acceleration of motion
3 Slowing the pace
Experiment 4. Behind direction
5. Convergent

1 RESISTANCE
The point is when one party dominates the market will move in the direction of the candle For instance when buyers dominate the market in the direction of the candle will continue to rise .During no resistance from seller (no sales means) candle is formed to follow the direction of the previous candle.

Until a time when most traders feel the price is too high or too saturated already, it was the action appears as a form of resistance from the sale of the seller. One reason is profit taking.

Forms of resistance shown by the tail candle .When greater resistance than dominance, then the next party resistance was winning and market domination change will occur, so that the trend will be back here arah.Dari we can predict that the next candle will reverse direction as well.

2 Candlestick ACCELERATION
Body of a candle that is larger than the previous candle showed an enthusiasm. So when many traders were enthusiastic open position, it will generate a force to move the market so it's in line with the type of enthusiasm. Moreover, there is no resistance, then we can predict the direction of the candle to be formed with an enlarged candle.

3 Candlestick slowdown

The opposite of enthusiasm, doubts traders to open positions menyebabkanmarket slowed. This doubt arises because traders assess the market was too high, too low, or the market is saturated conditions in the zone of support & resistance. In the absence of traders who open a position, then there is no power to move the market.

In these conditions we have to get ready to open up a position behind the direction, because the market will be taken over by one of the parties.

BEHIND THE EXPERIMENT 4. Candlestick DIRECTION
In a saturated market position there will be those who try to end the trend going, who want to reverse the direction of a trend. But sometimes the effort begins with a test condition, the test whether the market could be reversed completely -Right point or not. It is characterized by a long tail candle opposite to the direction of the trend is going.

Chronology is before the period ended as candle will be formed in the opposite direction of the previous candle candle .Menuju final period and pulled back to close at the direction of the previous candle.
The existence of this experiment indicate the turning direction will occur reverse direction. So that in these conditions we can prepare ready to open positions against the trend.

5. Candlestick convergent
Slowing body candle and a resistance (number 2) showed that the majority of traders expect the market reverse direction. But when suddenly appeared a candle that shows the enthusiasm remains in line with the trend is going (moner 3), is questionable.

Can be likened to when everyone wants one thing, but there is one people want different things, so when viewed from power, power of the people is actually a small and virtually empty, so it is very easy to defeat.

This candle convergent condition can also occur because there are certain parties who want to get the best price, although already know the market will reverse direction, but still pulled into a higher or lower first to get a better price, then the market reversed point.

In these conditions, we see other indicators, if other indicators also stated convergent, then we could open a position opposite to the trend going.

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