Lesson 15: Summary: Japanese Candlesticks

We’ve covered a lot about Japanese candlesticks. Hopefully, you’re not at wick’s end but are actually now fired up about candlestick charts.

Maybe we’ve even ignited a flame that becomes a lifelong passion for Japanese candlesticks.

Let’s summarize what you’ve learned about Japanese candlesticks:

• If the close is above the open, then a hollow candlestick (usually displayed as white) is drawn.
• If the close is below the open, then a filled candlestick (usually displayed as black) is drawn.
• The hollow or filled section of the candlestick is called the “real body” or body.
• The thin lines poking above and below the body display the high/low range and are called shadows.
• The top of the upper shadow is the “high”.
• The bottom of the lower shadow is the “low”.

Long bodies indicate strong buying or selling. The longer the body is, the more intense the buying or selling pressure.

Short bodies imply very little buying or selling activity. In street forex lingo, bulls mean buyers and bears mean sellers.

Upper shadows signify the session high.

Lower shadows signify the session low.

There are many types of Japanese candlestick patterns, but they can be categorized into how many bars make up the candlestick pattern.

There are single, dual, and triple candlestick formations.

The most common types of Japanese candlestick patterns are the following:

Just refer to the Japanese Candlesticks Cheat Sheet for a quick reference on what these candlestick patterns mean.

Combine candlestick analysis with support and resistance levels for the best results.

And finally, here are some words of wisdom:

This is the forex market and nothing is set in stone!

And if you’re looking for a more in-depth look at Japanese Candlesticks, you can’t go wrong with the book, Japanese Candlestick Charting: A Contemporary Guide to the Ancient Techniques of the Far East. It’s written by the man himself, Steve Nison.