Candlesticks are one of the most popular chart types worldwide. Candlesticks can also be used as a highly important and extremely useful technical analysis tool. Preferably, a lot of traders turn to them to analyze the market movement, monitor the prices, and to trade due to different reasons. In the next paragraphs, you can get a better understanding of Candlesticks patterns and some ways to use them effectively to both anticipate and trade.
There are different patterns of Candlesticks, including the simple ones and the complex ones. Based on your trading strategies and skills, you can pick each of them. But it should be noted that although Candlesticks show the price and the signals in a good view and also it is exciting to use them for monitoring the battle between the buyers and the sellers, reading and understanding their patterns is not easy. In fact, in the financial market, a bearish candle can appear at any time even at a point in a bullish market, and also, the Visa Versa can happen. In the following, there are some crucial tips you can refer to them to prepare for analyzing and understanding:
Recognition of the Candles and signals
If you want to use Candlesticks as a tool, necessarily, you must know the tool you are about to use in all aspects very thoroughly. To use candles as tools, not only should you know the differences between bearish and bullish candles, but you should also understand the nature of the candles which appear on the market while you are trading. Like all charts and assets, candles are completely different from each other too. A strong candle in one asset market can be an insignificant one in another market. For example, if you are trading EUR, USD or JPY, you should know the differences between a medium and a long candle. As a trader, you should know that strong candles appear when the trade volume and the volatility of the market are very high, while the average candles are formed on a normal trading day when the market is in average condition. When you find out the candles patterns and understand them deeply, you need to turn your attention to the signals which they provide you with. You should know that what kind of signal each candle provides you with and also what the reliable signals are. Do not forget that all signals are just mere signals until they shift to a strong signal, which you can trust and act upon it. To decrease your errors, you should learn the different types of signals each candle makes to be able to predict the market movement easier and more effective.
Move with the market
Candlestick signals can appear at any price level. Professional traders believe that a strong signal usually can break a support or resistance level. Support and resistance lines do not appear randomly or accidentally; you can see them at the price levels in which buyers or sellers are about to enter the market. Therefore, you should be very aware of those lines. When you see a spotted signal on a support or resistance line, first try to identify the type of the signal received. After defining the type of the signal, note the market movement. As a simple sample, a bearish candle that breaks under the resistance line is a signal of a bearish market. Always remember that the market context is king!
Closed Candlesticks are important
A very noticeable point about the Candlesticks is that they are not a signal until they are closed. If you want to use Candlesticks to trade, you need to wait for them to close. The candle you see on your screen is not a signal until it is closed; that is when you can trust it and decide based on it. Sometimes you need to wait until the next day monitoring the market and waiting for the candles to close, but it is a very reliable strategy that you can decide upon it. If you want to invest and trade in BinaryOptions market, Candlesticks can be a beneficial tool for you. Try to gain knowledge about them more and follow the tips above for better performance.