One method of technical analysis is to read a candlestick chart. According to the technical analysis of the data provided candlestick that has formed, we can predict what the next candle will be formed.
Is candle Candle Up or down. So if we have a picture of what the candle is formed, we can make a decision whether to buy or sell.
So, Here's how to read candlestick chart:
In Psikology, candle formed due to selling pressure and buying impulse. The difference in the amount of pressure and encouragement is what later led candlestick forms differ from each other.
Chronology candlestick formation:
- When there are many buyers are doing BUY, thus increasing the market price at the end of the market closed above the opening price, eventually formed the candle Up (green). The amount of impulse buying can be measured from market movements from Low to Close. The greater the motivation, the greater body candle is formed. So the amount of green candle body shows dominance buyers.
- When many traders are doing SELL, the market price goes down, so at the end peiode usually closing market value below the opening price. This condition causes the candle that formed red (down). In the candle down (red) High pressure is measured from the seller to Close. The greater the pressure selling, then the price will fall further and further establish a long red candle body. So the body size of the red candle shows the magnitude dominance seller.
To determine the direction of the next candle, there are some that need to be noticed.
1. Resistance 2. Acceleration of motion 3. Slowing the rate of 4. Under the direction Experiment 5. Convergent
The point is when one party dominates the market will move in the direction of the candle. For example, when buyers dominate the market in the direction of the candle will continue to rise. As long as there is no resistance from the seller (no sales means) candle is formed following the direction of the previous candle. Until one day when some traders feel the price is too high or too saturated, it appears the sales action As with forms of resistance from the seller. One reason is profit taking.
Form of resistance shown by the tail candle. When the resistance is greater than dominance, then the next party to fight to win and will be a change of market dominance, so that the trend will reverse direction. From this we can predict that the next candle will reverse direction as well.
2. CANDLESTICK ACCELERATION
Body a candle that is larger than the previous candle showed an enthusiasm. So when many traders were eager to open a position, it will produce a power to move the market so that the direction of the kind. Moreover, there is no resistance, then we can predict the candle that will be formed in line with the enlarged candle.
3. CANDLESTICK DECELERATION
The opposite of enthusiasm, skepticism traders to open positions led to market slowed. This doubt arises because traders assess the market was too high too low, the market is saturated or support and resistance zones. In the absence of traders who open a position, then there is no power to move the market. In this condition, we must be prepared ready to open a position behind the direction, because the market will be taken over by either party.
CANDLESTICK TRIAL REVERSE DIRECTION
In a saturated market position there will be those who try to end that trend going, who want to reverse the direction of a trend. But sometimes the effort begins with sebuuah test conditions, the test out whether the market could actually be reversed point or not. It is characterized by a long tail candle opposite the direction of the trend is going. Chronology is before the period ended as candle will be formed in the opposite direction of the previous candle. Towards the end of the period candle pulled back and closed to the direction of the previous candle. The existence of this experiment indicate the reverse direction will be reverse direction. So at this condition we can get ready to open positions against the trend.
Slowing body candle and a resistance (number 2) showed that the majority of traders expect the market reverse direction. However, when it suddenly appeared a candle that shows the enthusiasm remains in line with the trend that is happening (number 3), is questionable. Can be likened to when everyone wants one thing, but there is one people want different things, so when seen from energy, energy is actually one small and virtually empty, so it is very easy to beat.
This candle convergent condition can also occur because there are certain parties who want to get the best price, even though it knew the market will reverse direction, but still interesting to be higher or lower ahead to get a better price, then the market reversed point.
In these conditions, we see other indicators, if other indicators also states converges, then we can open opposite the trend going.