Previously we have discussed what is Japanese candlestick, in this paper we will discuss the anatomy of the shape of the Japanese candlestick itself. This is important and useful for us a trader to know the condition of market psychology.
Like humans candlesticks have many forms, some are long, short, long-tailed, or short-tailed.
Candlesticks that have a long body shape indicate the strength of the buyer or seller. And the longer the body, the higher the level of pressure to sell and buy. The meaning is that sellers and buyers are very strong and are taking over market conditions.
Whereas candlesticks that have short body shapes indicate that there are very few buyers and / or sellers in the market. Keep in mind that in forex, what bull means is buyers and bears are sellers.
Candlestick with a long body shape and white indicates very strong buying pressure. The longer the body shape, the stronger the strength of the buyers and the market conditions become bullish.In other words, bulls are beating bears in the market.
While the candlestick with a long black body shape indicates that selling pressure is strong. The longer the body shape, the stronger the strength of the sellers and the more bearish market conditions. In other words, bears are beating bulls in the market.
Japanese Candlestick Tail Mysteries
Candlestick tails or commonly referred to as “The Shadow” which appear above and / or below have a very important meaning such as a valuable key in a trading session. The upper tail represents the highest price and the lower tail represents the lowest price in a trading session.
A candlestick with a short tail indicates that the price is moving around the opening and closing prices and while a long tail candlestick indicates that the price is moving away from the opening and closing prices.
If the candlestick has a long tail below and a short tail above then this indicates that the session was initially dominated by the seller trader so the price was depressed far below the opening price.But then a crowd of buyer traders come and many are interested in buying so the price goes up again near the opening price so that a long tail forms below.If the candlestick has a long tail above and a short tail below then this indicates that the session was initially dominated by the buying trader so that the demand for the price becomes very high.But then either because of what the sellers came and refused the price increase and the price was pressed down again approaching the opening price so that a long tail formed above.