Candle stick charts originated in Japan 100 years before the West developed bar and point and figure charts. In the 1700's, Homa, a Japanese man, discovered that where there was a connection between price and supply and demand for rice, markets were deeply affected by the sentiments of traders.
Candles express this emotion by visualizing the size of the
price movement with different colors. Traders use candles to make trading
decisions based on regular patterns that help predict short-term price
direction.
1. Traders use candlestick charts to forecast price movement based on previous patterns.
2. Candlesticks are important in trading because they display four price points (open, close, high, and low) across the time period specified by the trader.
3. Many algorithms use the same price data that is displayed in candlestick charts.
4. Emotion is typically a major reason in trading, which can be read in candlestick charts.
More can be read and learned from this book.
