Rancakmedia.com – Here's how to read the latest candlestick starting with looking at a chart which consists of several candle bodies, where the body represents the open and close prices, while the tail shows the high and low prices.
The shape of the candlestick has various meanings if it is in a different position, so that we are not wrong in analyzing the shape of the candlestick, we need to be careful and patient in analyzing the next candlestick.
Analysis Based on Location and How to Read the Latest Candlesticks
1. Doji candlesticks
When the market is quiet, the chart formation will be relatively flat, the doji candlestick really shows that at that time the market is quiet, the energy is small and traders who have not entered the market or opened positions in trading, that is the direction of movement.
The next candle will be largely determined by how many traders enter the market. In this situation, we must not enter the market. It is better to wait until more solid and clear indications appear.
In turbulent times, the doji that forms after a candle with a long body represents the blocking of the candle's power. Such a Doji is usually formed by corrections. Therefore, the direction of the following candle will explode to form a long body candle again in the direction of the long body candle before the doji was formed.
The doji that forms after a candle stick with a short body (spinning top) indicates that at that time the market was weakening and might be considered to have reached its peak. And began to enter the power for the reversal of direction. Hence the berry candle stick
This kut is opposite the candle before the doji formed.
2. Long upper tail candlestick
If a candle stick with a long upper tail occurs towards the end of an uptrend, it indicates that resistance has started to push the price down. Because the energy is large enough to form a long upper tail, the following candle will move down.
If the long upper tail candlestick occurs in the middle of a strong rally, and the body is still bullish, it indicates that the correction has started and the downward pressure was not strong enough to push the price down. So the market is ready to move up again.
However, if the upper tail candlestick is bearish, it indicates that the downward pressure was strong enough to push the close below the open. So the direction of the following candle will most likely move down.
If the long upper tail candlestick appears at the end of a downtrend, the long upper tail indicates an attempt to increase the price. Or after going up the market is pushed down first to get the biggest price. After this candlestick the next market will move higher.
3. Long body candlestick
If a candlestick appears with a long body after the market has moved from a saturation state, it indicates that there is more energy to break out of the saturated territory. At this time many traders started to believe the market would go further. The direction of the next candle will be the same as the direction of this long body candle.
The long body of the candlestick appears in a state of very high volatility, indicating that at that time one party controlled the market. The following market direction corresponds to the direction of the long body candle stick.
If there is a candle stick with a long body and it appears near the end of a trend or after a weakness has formed, this is a sign of diversification. Therefore the direction of the following candlestick is opposite to the long boy candlestick.
4. Long lower tail candlestick
If it appears near the end of a downtrend, it indicates an attempt to reverse course for the upside. The overall direction of the market will move higher. Likewise with the direction of the following candle going up.
If it occurs at a time when volatility is increasing, it is a sign that the market is ready to go up again. If it happens to go down erratically, but if this type of long tail candlestick is bearish, the market will move down again. But if the type is bullish then the following candle will move up.
Because with this bullish type it indicates that the strength to go up is very large. If this happens at the end of an uptrend, then it is an attempt to reverse the direction down, sometimes straight down or some of the following candles will move down.
Thus knowledge of how to read a candle stick is very useful in identifying the direction of the following candle. Being more careful and patient in interpreting the direction of the next candle stick will make traders not easily fooled by false signals which can result in mistakes in deciding to open an up or down position.
The shape of the candle stick has various meanings if it is in a different position. The direction of the following candles will be determined by how many traders enter the market. The doji that forms after a candle stick with a short body (spinning top) shows that the market is weakening.
If there are candlesticks with a long body and appearing towards the end of a trend or after a weakness has formed, it is a sign of diversification. Being more careful and patient in interpreting the direction of the next candle stick will make traders not easily fooled by false signals.