Learning candlesticks

Thanks be to the rich merchant who invented such a method to keep track of price movements. But I really wish I can ask him a few questions personally if he were still alive. One is how is it that the opening price of a candlestick can differ from the closing price of the preceding candlestick. In some sense this is related to my query as to how can the closing quote of the currency pair be different from the opening quote after the weekend break. I decided I need an avenue to ask such questions and be guided by experts, if they are willing to do so.

There is an incredible amount of information to pick up from a series or even a single candlestick.

One of the better sites I've learnt from today is http://candlestickforum.com/PPF/Parameters/16_18_/candlestick.asp

But there are way too many patterns which I can't stomach at one sitting, so I guess I'll have to revisit in another few days time.


With whatever I have learnt, I decided to short (using virtual cash) both GBP/USD and EUR/USD. In both cases, on the daily chart, both pair have shown 3 black bars in a consecutive downward fashion, as we can see to the left.




It was a simple decision with the GBP pair. It is pretty near it's historical peak and here it comes tumbling down. No surprise. But the EUR one is kinda a gamble. In any case, I still can using the poker strategy of shorting the currency even more if the trend does head north. Sort of a dollar-cost averaging method.

Now that I've made that decision though, I think I realised some finer points of using candlesticks to make trading decisions. Simply take the 3 consecutive black candlesticks as an example. Had the trend not hit close to historical highs, the lesser body of the 2nd and 3rd black candlestick might mean the market is slowing down in its appetite for shorting the currency. Of course, the 3rd's body is fuller than the 2nd, so that wouldn't make my interpretation very correct.

Firman said I'm beginning to turn from a pro-fundamental analyst to a somewhat technical guy. And he suggested I get forex news off some websites that provide such news. I'm considering that, but I am not done with my experiment, I believe.