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Forex traders need to monitor the four price points (opening and closing prices, highest and lowest prices) to determine the currency pair’s price movement at a certain period. 

With all of the numbers traders have to consider, this can get only more confusing. With Japanese candlesticks, however, forex traders can get the information they need at a glance and even see for themselves the movement of current forex trading within minutes.  Experienced forex traders can even predict trends and any significant change in the market.  The patterns created by Japanese candlesticks make it easier for traders to plan their own strategies for selecting exit and entry points.               

Reading the charts with Japanese candlesticks

What traders like about Japanese candlesticks is they create a clear picture of the price action and directly tells the reader if the trading period is bullish or bearish.  The “body” the Japanese candlesticks show is the difference between the opening and closing prices.  Clear Japanese candlesticks indicate bullish period for the currency pair.  Filled Japanese sticks, on the other hand, signifies the bearish period.  Those thin lines found on top or below the body of Japanese candlesticks indicate the extreme low and extreme high price points for the trading period.  These thin lines are known as the shadow or wick of Japanese candlesticks.   

Japanese candlesticks and other tools for analysis

Traders cannot just rely on the four price points and any pattern shown by Japanese candlesticks.  Candlestick charts are best combined with other tools for analysis. This is because in forex trading, market trends cannot be predicted just as easily.  There are too many factors affecting change in a specific trading period.