The Japanese candlestick chart, is considered as the most important chart in the Forex market to determine the historical and current market trend. Many people start trading the foreign currency without prior knowledge in analyzing the candlestick chart, as a result, they make some mistakes and they lose their money. Here, I would like to teach you how to avoid interpreting the chart wrongly.
Firstly, you should know all the basics and common indicators in the chart. In candlestick analysis, basic indicators such as shooting star, hammer, doji et cetera are very important in determining the current competition between the buyers and sellers. You might not need to memorize all the jargons, however, you should be able to imagine the current competition through the chart. For instance, if there are few bullish white candlesticks, and suddenly, there is a black candlestick with short body and long lower shadow, followed by another black candlestick with long body. You should understand that the sellers are starting to dominate the market and you should go short during that time.
Secondly, you should not solely rely on the candlestick chart and you should use other indicators to help you in interpreting the chart. This is because all indicators are not accurate, but their accuracy can be confirmed through countercheck with each other. Therefore, you should learn to predict the current market saturation with indicators like RSI (relative strength index), MACD (moving average convergence divergence) et cetera.
Lastly and most importantly, you should never be greedy. If you already have all the necessary skill in chart analysis, the only problem that will cause wrong candlestick interpretation will be your avarice and your emotion. People who fail in Forex market are people who do not have patience and the people who are greedy. You should trade rationally, not according to your feeling.
In conclusion, winning in the Forex market is very easy if you know how to analyze the Japanese candlestick chart and use it in conjunction with other indicators such as RSI, MACD et cetera.
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