To identify a resistance level using Japanese candlesticks, follow these steps:

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1. Observe previous peaks:

Look for a price level that the price has reached multiple times and has not been able to break through upwards. This level is considered a resistance area.

Practical example:

If the price rises to 1.500 three times and then falls, the level 1.500 is resistance.

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2. Note the shape of the candles at the peaks:

Candles with long upper wicks indicate that the price attempted to rise but was rejected by the market, which is a sign of resistance.

Doji candles or bearish engulfing candles at the peaks also indicate the beginning of a downward reversal from a resistance area.

3. Use the appropriate time frame:

Resistances are more reliable in larger time frames (1 hour, 4 hours, daily).

However, smaller time frames can be used to determine precise entry and exit points.

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