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Disclaimer: As trading in the Forex market is very risky, the reader if going beyond this point

and applying the concepts and methods describing in this document do so on hisor her own will and risk. The writer and or anyone involved in the compiling ofthis document will not be held responsible for any losses incurred by using themethods described in this document as no money management nor stop losslevels are discussed as it vary from trader to trader according to there own riskand capital profiles.

Using Candlesticks with Indicators and Patterns 1

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But complimenting Other techniques with that of Japanesecandlesticks will give you that extra edge in getting a much betterprice – a lower price if you are buying and a higher price if you areselling. Hundreds of charts illustrated will convinced that Japanesecandlestick signals lead other technical indicators in timing marketentry and exit. It is because candlestick signals are based on ananalysis of price itself, not timing.

When you are analyzing the candle chart, you are in effect analyzingthe psychology of the market participants that is reflected in its price.

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Why using Candlesticks?? – Six reasons..

1. Leading Indicator - They have the ability to show reversal signals earlierthan other charting techniques. As such candlestick charts are a trueleading indicator of market action. They regularly identify potential movesbefore they become apparent with other technical tools. Many Japanesecandlestick patterns are not found in other chart techniques.

2. Pictorial - They are very pictorial and describe the state of players’psychology the moment they unfold, all of which can be utilized to makemeaningful trading decisions. Terminology like the “hangman”, “shootingstar”, “dark cloud cover”, “hammer”, “abandoned baby” paints indelible wordpictures which can assist the trader to remember the pattern throughremembering its name. The Candlestick technique consists of hundreds ofdifferent pattern groups that accurately identify specific traits and tendencies.


3. Versatile - Candlestick charts are versatile in that they can be used aloneor in combination with Western technical tools. They are unlike point-and-figure charts, which cannot be used alongside other Western technicalindicators. Candlesticks use the same price data as bar charts yet thecandlestick technique better promotes the ability to recognize complexpattern groups and predict the next possible outcome based on them.

4. Can be applied to any time-dimension - Candlestick charting techniquescan be adapted for either short or long term trading. Candlestick charts areexcellent for short- term trading through the use of intra-day charts like the1-minute, 5-minutes, 15- minutes, 30-minutes and 1-hour charts. They canalso be applied for longer term forecasting through the use of daily, weeklyand monthly charts.


5. Flexibility and adaptability - Candlestick charts can be applied to followas many markets as desired - be it stocks, futures, currency or commodity.In order words, a trader can apply candlestick principles to analyze ortrade Malaysian stocks, index futures or crude palm oil futures. If traderswish to diversify their portfolio they can trade, for example, U.S. stocks,U.S. futures, foreign currency, Japanese or U.S. treasury bonds and for thatmatter any markets around the world.

6. Time-tested- Dependable and Useful - The candlestick charting techniqueis time tested and had been refined by generations of use in Japan. Thefact that it is still very much in use today after more than 300 years sinceits discovery is testimony to its usefulness.

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