Possible Japanese Candlestick Chart Trades for December 31, 2007 at FinGad.com

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Possible Japanese Candlestick Chart Trades for December 31, 2007

Categorie: Equities
Submitted 10 months ago by

Brandon , Broker at CMP

So what's the big deal about Japanese candlestick charts? The more I work with them, the more I believe that it embodies The Wisdom Of The East, the Tao of the Market. Let me explain. The closest Western cousin is the Open-Low-High-Close (OLHC) chart, which shows the same data as the candle chart. However, when you look at a candle chart, you get a much clearer picture. Compare a one month OLHC chart of Microsoft with a candle chart for the same month. The OLHC chart shows the open and close as tick marks, open to the left and close to the right, of the line whose height is the difference between the high and the low. The candle chart, instead, shows the open and close prices as a rectangle, either colored green (or transparent) when the close is higher than the open, or red (or black) when the close is lower than the open. Immediately, you see the volatility of the price action. A small rectangle (or a line if the close = open, a pattern known as a doji) means little or no price change. A deep rectangle means a large move. The price move and direction, the most important information for a trader, jump out at you. Over time, a series of deep, green rectangles shows a clear uptrend, with the reverse for a downtrend. With the OLHC chart, it's difficult to pick these trends up visually.The eye is drawn to the high vs. low line on an OLHC chart, while on a candle chart the eye is drawn to open vs. close. What's more important? Think of the daily market ... More...

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