1. How to Read Japanese
Candlesticks

2. When you open a trading
platform, you can see charts for
different currency pairs.
The charts may be represented
in 3 forms: line, bar chart and
candlesticks.

3. Japanese candlesticks are one of the most popular
methods of the technical analysis. Combinations of
Japanese candlesticks help to recognize the current
trend and determine entry points to open long and
short positions as well as identify possible reversals
in the market.

4. How are Сandlesticks
Formed?

5. Japanese candlesticks reflect
the price change of a trading
instrument over a certain period.
For example, if we consider the H1
chart, each candle on it reflects
fluctuations during one hour.

6. Japanese candlestick consists of four indicators.
● Open – the price formed in the beginning of the
trading period;
● Low – the lowest price of the trading period;
● Close – the price formed at the end of the trading
period;
● High – the highest price of the trading period.

7. Lower shadow
High
Open
Close
Low
Upper shadow
Lower shadow
Upper shadow
High
Open
Close
Low

8. A candlestick is a filled or a hollow body with upper and
lower shadows. The filled candlestick is considered to be
“bearish”, the hollow one – “bullish”. If quotes increase, we
see hollow candlesticks. If quotes fall, they are filled.
Bearish Bullish

9. Japanese Candlesticks
Interpretation

10. There are various types of Japanese candlesticks on Forex. We can analyze
the bodies and shadows size of candlesticks and predict the possible future
behavior of the price.
Let's consider the main types and its interpretation.

11. Hammer is the reversal signal. It has a small
body located at the top of the price range, a
long lower shadow, the upper shadow is
practically absent. Hammer is formed on a
downward trend and predicts further growth.
So if you see “hammer” on the chart the
trend will slow and change its direction.
Hammer (Pin-bar)

12. A hanging man is a bearish pattern that
forms at the end of an uptrend. If you see
this signal, most likely, the trend is
reversing and will go down. However, it’s
better to wait until the next candle is
formed.
Hanging Man

13. Shooting Star pattern looks like reversed
Hanging Man. It has a small body and a long
upper shadow, and it is formed at the
resistance level. Shooting star means that
the buyers raised the price, but the sellers
managed to overcome them.
Shooting Star

14. The inverted hammer occurs mainly at
the bottom of downtrends and may be a
warning of a potential reversal upward.
The pattern means that the number of
sellers decreases, and buyers –
increases.
Inverted Hammer

15. Doji is a candlestick which open and close prices are equal. Doji represents indecision
in the market. Doji is a common pattern during flat (when there is no trend).
If the Doji forms in an uptrend or downtrend, you should pay attention to it, as it is a
signal that the buyers are losing conviction when formed in an uptrend and a signal that
sellers are losing conviction if seen in a downtrend.
Doji has various types depending on the length of the shadows:
Doji
Long-legged
Doji
Dragonfly
Doji
Gravestone
Doji
Four price
Doji

16. Marubozu is a candlestick without shadows.
There are bearish and bullish Marubozus.
These candlesticks indicate that buyers/sellers
dominate in the market and the trend will
continue. The filled Marubozu tells about the
downtrend and implies the bearish
continuation or the bearish reversal, the hollow
one indicates the uptrend and tells about the
bullish continuation or the bullish reversal.
Marubozu

17. Engulfing is a two-candlestick pattern.
It consists of two candles of different colors.
The body of the second candle engulfs
the body of the first one. There is a bullish and
a bearish engulfing. A bearish Engulfing
pattern may provide an indication of a future
bearish trend. A bullish Engulfing may be a
warning of beginning ob bullish trend.
Engulfing
Bearish
Bullish

18. Japanese candlestick chart is the
most-often used chart, as candlesticks
display four important indicators at once.
It’s quite easy to understand and,
nevertheless, it’s very useful. That’s why
the majority of traders prefer it.

19. Thank you for
watching
the presentation!