Japanese Candlesticks: A List Of Japanese Candlesticks Definitions and Patterns

In the 17th  century, Japanese rice merchants invented the candlestick charting and nowadays, they are considered the number one tool when trading Forex. Below is a quick explanation to each Candle Stick along with a picture of how it looks like.

While the Japanese candlesticks charting and analysis was different from the US version initiated by Charles Dow around 1900, however they both rely on the following hypothesis

1.    The way prices move – their behavior – in the financial market is more important than what can explain it (financial information economic releases, global news, etc).
2.    All known information is reflected in the price of a specific currency at all times
3.    Buyers and Sellers (Market Participants) act according to their expectations and their emotions.
4.    Financial Markets fluctuates.
5.    Prices should not be a reason for a devaluation of a currency.


Candlestick Layout



When a charting system displays a Japanese Candlestick, the shape of the candle will be determined by:

1. The opening price;
2. The closing price;
3. Lowest price recorded during the same time period;
4. Highest price recorded during the same time period;

The Candlestick will be black when the closing price is lower than the opening price; i.e., analyzing a currency in a period in which this currency was in a falling trend. If the closing price is higher than the opening price i.e., the price of the currency is raising, then the Candlestick will have a white body.

Basic Patterns of the Japanese Candlesticks

Black Candlestick With Long Body

White Candlestick with Long Body

Black Candlesticks with a long upper Shadow and short lower Shadow

Black Candlesticks with a short upper Shadow and long lower Shadow

White Candlesticks with a long lower Shadow and short upper Shadow

White Candlestick with a short upper Shadow and a long lower Shadow

Normal Black Candlestick

Normal White Candlestick

Black Marubuzo

White Marubuzo

Black Spin Top

White Spinning Top

Hanging Man

Hammer

Inverted Hammer

Shooting Star

Doji

Doju (Short Upper Shadow and long lower Shadow)

Dragon Fly Doji

Long Legged Doji

Gravestone Doji