Types of Japanese Candlesticks and Predicting Trends
In order to benefit from the patterns and shapes of Japanese candlesticks, they have been divided into types based on the number of candles needed to give you a clear signal in the market. There are models for single, double and triple Japanese candlesticks, and in each type of Japanese candlesticks, the signals given by the candles are divided into reversal or continuation.
The most important use of Japanese candlesticks in trading is to determine the trend, whether it is a reversal of the current trend and is a reverse signal or confirmation of the continuation of the current trend after a period of sideways movement and is a continuation signal.
A bullish reversal signal means the formation of a pattern of Japanese candles, whether single, double or triple, at the end of a downtrend in the market, to give a signal indicating a reversal of the price movement upwards.
A bearish reversal signal means the formation of a pattern of Japanese candles, whether single, double or triple, at the end of an upward trend in the market, to give a signal indicating a reversal of the price movement downwards.
There is a continuation signal that indicates that the price movement will continue in the same current direction, whether up or down. This signal from Japanese candlesticks helps investors identify a period of calm and price fluctuation in the market before completing the previous movement.
Single Japanese Candlestick Patterns
It is one of the easiest and most popular Japanese candlestick patterns among traders, and the pattern consists of only one candle.
Round Top Candle (Neutral)
It is a pattern consisting of a price candle with a short body and an equal upper and lower shadow that exceeds the size of the candle. This pattern indicates that there is no decision being made in the market due to the equality between the buying and selling forces, and therefore this pattern is interpreted as a period of change in the price direction.
The rounded top pattern itself is neutral and does not reflect the price movement, but it is a prelude to this change because it is a weakness in the current price trend.
