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What are Japanese candlesticks?
What are Japanese candlesticks and how do you use them in market analysis?
Technical analysis is one of the fundamental pillars in trading financial markets, as it enables traders to understand price movements and make informed decisions. Among the most common and effective analytical tools are Japanese candlesticks, which provide an accurate visual representation of price over specific time periods. Japanese candlesticks are an ideal tool for both beginners and professionals, as they help interpret market price behavior and predict future trends.
What are Japanese candlesticks?
Definition of Japanese candlesticks and their historical origin:
Japanese candlesticks are a graphical representation of price movement over a specific time period. This method originated in Japan in the 18th century by rice trader 'Homma Munenisa', who used it to analyze price movements. Later, this method became an essential part of technical analysis in all financial markets.
Price movement representation:
Each Japanese candlestick represents a set of information related to the price over a specific time frame, including:
Opening Price: the price at which trading began in the time period.
Closing Price: the price at which trading ended in the time period.
High Price: the highest point the price reached during the period.
Low Price: the lowest point the price reached during the period.
A candlestick with a filled body (indicating a drop in price).
A candlestick with a hollow body (indicating a rise in price).
