Japanese Candles In Forex Trading Part 2
In the book Explanation of the candle schedule Greg Morris pays attention to qualify a combination as reverse model availability of a previous trend for change. The bull turn demand the previous descending trend, and the bear turn demands the previous ascending trend. The trend direction can be specified with use of the trend lines, sliding averages, the analysis of maxima/minima or other methods of the technical analysis. The descending trend can exist, while the market tool is traded below the descending trend line, below the previous maximum or below certain moving average. The length and duration will depend on individual preferences. However, as candles by the nature are short-term, it is better to consider price activity for last 1-4 weeks.
The candle which is located with gap (separation) from the previous candle is, as the traders say, in a position “star”. The first candle usually, but not always has big body and the second candle in a position of “star” has a small body. Depending on the previous candle, a candle in a position “star” can be with downward gap or upward and it seems isolated from the previous price movement. These two candles can have any combination white and black. Doges, the hammers, falling stars and tops have small bodies and can be formed in a position of “star”. Later we research combinations from 2 and 3 candles which use a star position.
The candle which is formed within a body of the previous candle is in a position of charamy. Charamy in the Japanese language means to be pregnant and the second candle would be in the first candle. The first candle usually has the big body, and the second is smaller than the first body. Shades (maximum/minimum) of the second candle is not necessarily should be in limits of the first though it is preferable. Doges and tops have small bodies and can be formed also in a position of charamy. Later we research models of candles which are used in a position of charamy.
People who took the decision to participate in forex trading should start from learning the basics of currency exchange market to make sure you do not have problems with this industry.