Now we've gone over what is forex price action and learned the basics of Japanese candlesticks, lets move forward to the most important forex candles.
There are literally hundreds of forex candles out there for you to discover. But like many things in trading, when it really comes down to using them on a live forex chart, they don’t really form like the textbook tells you they do.
The most important candle patterns to look out for, are indecision candles. This means look for candles that show areas where the bulls and bears are currently in a battle for control.
This battle is best highlighted on a price chart, by long wicks and a small candle body.
Forex candles that match this description in some way are known as dojis.
Textbook dojis have the same open and close price, but for us all that matters is that their bodies are extremely small. A doji should have a very small body that looks something like a thin line.
Dojis suggest there is a struggle for control between the bulls and the bears, resulting in this key indecision forex candle forming.
Price moves above and below the open price during the candle’s time period, but closes back at, or at least very near, the price it opened.
Neither buyers or sellers were able to gain control and the result is indecision.
According to the trading textbooks, if the above two dojis have the slightest of candle bodies, then they are renamed the following:
But seriously... who gives a fuck?
They mean the exact same thing, so they are the exact same thing.
You’re never going to get that clean, textbook candle, so stop worrying about it. If they look the same, then they are the same.
If you have any questions around the key candle patterns to look for, then leave a comment below and I'll be happy to have a chat.
Best of probabilities to you,
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