Reasons Why Candlestick Charts Are So Popular Today

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Here are six reasons why candlestick charts are so popular amongst professional traders today:

1 Leading Indicator - They have the a&lity to show reversal signals earlier than Western charting techniques. As such candlestick charts are a true leading indicator of market action. They regularly identify potential moves before they become apparent with Western technical tools. Many Japanese candlestick patterns are not found in Western chart technicjjes.

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Chart 1.1 KLCI Daily (2001) - An example of how candlesticks lead MACD in timing entry & exit.

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Chart 1.1 KLCI Daily (2001) - An example of how candlesticks lead MACD in timing entry & exit.

Pictorial - They are very pictorial and describe the state of players' psychology the moment they unfold, all of which can be utilised to make meaningful trading decisions. Terminology like the "hangman", "shooting star", "dark cloud cover"', "hammer" , "abandoned baby" paints indelible word pictures which can assist the trader to remember the pattern through remembering its name. The Candlestick technique con-sistsaf hundreds af different pattern cpopsthat accurately identify specific traits and tendencies.

Versatile - Candlestick charts are versatile in that they can be used alone or in combination with Wfestem technical tools. They are unlike point-and-figure charts, which cannot be used alongside other Western technical indicators. Candlesticks use the same price data as bar charts yet the candlestick technique better promotes the ability to recognise complex pattern groups and predict the next possible outcome based on them.

. Can be applied to any time-dimension - Candlestick charting techniques can be 4 adapted fox either short car leng term trading. Ccndl^tickchBrtScre^EEU^fcr^cit;-term trading through the use of intra-dky charts like the 1-minute, 5-minutes, 15- minutes, 30-minutes and l-hour charts. They can also be applied for longer term forecasting through the use of dfeily, weekly and monthly charts.

Flexibility and adaptability - Candlestick charts can be applied to follow as nary markets as desired - be it stocks, futures, currency or commodity. In crder wcrds, a trader can apply candlestick principles to analyse or trade Malaysian stocks, index futures or crude palm oil futures. If traders wish to diversify their portfolio they can trade, for example, U.S. stocks, U.S. futures, foreign currency, Japanese or U.S. treasury bonds and for that natter any markets around the world.

z- Time-tested- Dependable and Useful - The candlestick charting technique is time-^ tested snd had been refined by generations of use in Japan. The fact that it is still very much in use today after more than 300 years since its discovery is testimony to its uf├╝ness.

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  • esther sinclair
    What are the reasons for using candlestick charts?
    2 years ago

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