Japanese Candlestick Patterns

Candlestick patterns used in Forex Trading.

The Basic Candlestick

More Candlesticks

Long and Short Trading day Candlesticks patterns: The long day represents a large price movement from the open to close position. The length of the candle's body are determined by the the price action of the days' trading. The Short days can be interpreted by the same process of the long candles. Note: You will note that there are a large percentage of trading days that do not fall into either of these two mentioned categories.

The Doji is one of the most important signals in candlestick analysis and is formed when the open and the close of the Trading Day are the same or very close. Length of the candle shadows are not important - The lengths of the shadows can vary. The longer the shadows are, the more significant the Doji becomes. The Japanese analyzers' interpretation is that the bulls and the bears are conflicting. The appearance of a Doji candle should alert the trader of market indecision.

The Bullish Engulfing Pattern: is formed at the end of a downtrend. A white body is formed that opens lower and closes higher than the black candle open and close from the previous day. This complete engulfing of the previous day's body represents overwhelming buying pressure dissipating the selling pressure.

The Bearish Engulfing Pattern: This pattern is directly opposite to the bullish pattern. It is created at the end of an up-trending market. The black real body completely engulfs the previous day's white body. This shows that the bears are now overwhelming the bulls.

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