Candlestick Analysis

Previously, we touched on the various types of charts. Candlestick charts were included in this tutorial. The tutorial alluded to candlestick analysis to determine future price action. Now we’re going to fill in the void with a proper tutorial about how to use candlesticks to determine the future direction of a currency pair’s price.

Three Types of Candlestick Patterns

There are three different types of candlestick patterns:

1. Single Candlesticks – Single candlesticks aren’t much a pattern in and of themselves, but they can indicate strong future movement in a currency pair price.
2. Double Candlesticks – Several candlestick patterns are made up of only two individual candlesticks. These two candlesticks, when they appear together, can indicate reversals, continuations of trends, or bull and bear markets.
3. Triple Candlesticks – Triple candlestick patterns are the most powerful, as they are the least frequent. When you see the triple candlestick patterns that will be explained in this chapter on candlestick analysis, you know it’s time for business!

Using Candlestick Analysis

Candlestick pattern trading has been around for centuries. Candlesticks were first adopted by Japanese rice traders to find future movements in the price of rice futures.

Today, candlesticks are still used. The candlestick chart is one of the best available to traders as it showcases more information than any other chart. In the 1990s, during the early days of online trading, candlesticks became popular again, with a man named Steve Nison publishing methods for candlestick analysis.

Now we’re going to show you how to make the most of candlestick analysis. By following through the next chapter, you’ll learn how to adopt candlestick trading into your trading arsenal to generate buy and sell points, and make high accuracy trading decisions.