Technical analysis has many fundamentals under it. As you may already know, technical analysis deals with data and interprets it to predict the future movements of the market. It helps in making informed decisions about the market and enhances the chances of success. Candlestick pattern is one of the fundamentals of technical analysis:
Why you should know it
If you aspire to start trading or investing in the share market, then you should have an idea as to how you will analyze the market. There are two methods for that purpose: Fundamental analysis and Technical analysis. Even though both are quite different, you will have to gain a working knowledge of both of them to make progress in this market. They will help you predict the future behaviour of the market and thus, enhance your decision-making capabilities. You will be able to avoid many hassles and difficulties in this regard.
The candlestick pattern is a method of preparing the chart of the market. It falls in technical analysis and it has been in use since 1850. The origin of this amazing invention is in Japan. There, rice traders used to prepare candlestick charts for keeping the track of rice prices. Now, it is used extensively in trading and it is one of the effective methods to predict the behaviour of the market. For share market technical analysis, a candlestick pattern is mostly the first choice for many advanced traders because of its simplicity and visual appeal.
You will be keeping a good amount of data while starting the creation of the chart. For every period you are going to display on the chart, you would want the high-low as well as the open-close values. The middle portion of the candlestick is referred to as “the body” or the “the real body”. There would be too thin and perpendicular going vertically through the body of the candlestick. You will be calling those “the shadows”. If a stock closes above the opening price, then you will draw a hollow candlestick having the bottom displaying the opening price. There are numerous candlestick patterns in the current market.
What else can help?
The best thing to learn about candlestick patterns and their use is to take a good course of technical analysis. When you will have a better understanding of how technical analysis works and how candlestick patterns are related to the other fundamentals, you will be able to implement it better.
Enrolling in a share market technical analysis course, you will be able to enhance your learning experience. It is important that you choose a great institute for learning the basics of this sector.
There are many variations of the candlestick pattern. Once you will get familiar with the concept, it will become quite simple for you to predict the future movements of the share market. You will be able to mitigate the risks as well as increase your overall earnings.