Japanese Candle-sticks Patterns Silver Analysis
Japanese XAGUSD Candlestick PatternsBrief History
Candlesticks were created in the 18th century by the legendary rice trader called Homma Munehisa to give overview of the opening, high, low & closing market price over a given time period.
They were used by the legendary rice trader to predict future market prices. After dominating rice market, Munehisa then eventually moved to the Tokyo Exchanges where he then gained a huge fortune using this trading analysis. It is said that He made over hundred consecutive winning trades.
Types of charts
There are three types of charts used in Silver: Line, bar and candles.
Line - plots a continuous line connecting closing trading prices of silver.
Bars- displayed as sequence of OHCL bars. O H C L represents OPEN HIGH LOW & CLOSE. The Opening trading price is portrayed as a horizontal dash on the left & closing trading price as a horizontal dash on right.
The main disadvantage of a bars is that it is not visually appealing, therefore most traders do not use them.
Candlesticks - these use the same trading price data as bar silver charts (open, high, low, and close). However, they in a much more visually identifiable way which resembles a candle with wicks on both ends.
How to Interpret
Rectangle section is called the body.
The high & low are described as shadows and drawn as poking lines.
The color is either blue or red
- (Blue or Green Color) - Silver Prices moved up
- (Red Color) - Silver Prices moved down
Most platforms like the MT4, use colors to mark the direction. Colors used are blue or green: when trading price moves up, red: when trading price moves down.
Candles Vs. Bar Chart
When candles are used it is very easy to see if the price moved up or down as opposed to when a bar Charts are used.
The Japanese techniques also have very many setups that are used to trade the market. These patterns have different technical analysis explanation and the most common are:
The above patterns is what makes the Japanese candlesticks popular among technical traders & it is why this type of analysis are the most widely used when it comes to analyzing the trading market. The analysis for these pattern setups in silver trade is the same as that one used in stocks trading.
Drawing These Charts in Meta Trader 4
To draw these on the MT4, select the charts drawing tools within the "MT4 Toolbar" - shown below.
To view this toolbar in MT4 navigate to "View" Next to file at top left corner of MT4 Platform, Click "View", Then Click "Tool bars", Then check "Charts" Button. Above tool bar will appear.
Once the above tool bar, pops up you can then select the type you want to convert to, If you want to view using the bar format, click the bar tool button as shown above, for line format click the line tool button, for Japanese candlesticks format click the "candlesticks tool button".
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