Japanese Candlesticks Review – The Binary Logic

Japanese candlesticks are a type of charts that describe the price movement such as currencies or security by the use of indicators. Japanese candlesticks are especially used in the Japanese. Japanese candlesticks are flexible such that can be used in any time frame be it a minute, 30 minutes an hour or one day. Japanese candlesticks are created by using the open, high, low and close, of each time stipulated. In case we are using a daily chart, a complete candlestick will be able to   provide the highest point attained by price within the day, the lowest price, the open price and the close price.

The Different Types of Japanese Candlesticks:

The Pin Bar:
Pin bar is considered as one of the most powerful Japanese candlesticks as explained by the Pinocchio strategy. In the Pinocchio, at the beginning, the Bears are strong and confident thus pushing prices lower but during the end of the period. The Bulls appear more strong which pushes the price higher thus making it close it a very high price with minimal upper wick as illustrated in the figure below.

Japanese Candlesticks - The Binary Logic 1

Doji Candle:
In most cases Doji candle shows the indecisions in the market. This type of Japanese candlestick is mostly formed when the Open price and the Close price are almost the same .Apparently such appearance will create a very small body size and long wicks. As much as Doji is an indecision indication, the price can move either side because at the end of it all one of the two sides will win as indicated in the figure below. In Doji candle, the prices can move towards one direction which makes the prices to fluctuate and eventually at ending the prices will close nearly where it opened.

Japanese Candlesticks - The Binary Logic 2

 

Marbouzu candle:
This is a type of Japanese candlestick that shows a one-sided strength. There is a complete control from the bulls’ side while the bears side takes a full control. This type of candlesticks indicates that there is a strong selling or buying price in the market. There is no one side of the market that has power over another one as illustrated in the figure below.

Japanese Candlesticks - The Binary Logic 3

 

 

Disadvantages of Japanese Candlesticks:
Basically, if all the signals provided by the Japanese candlesticks would be 100% correct then any kind of business could be at the top of the prime today. Like any other binary indicator tool, they are prone to fail thus they need to be combined with other tools to work perfectly. Genuinely, it’s hard to find price indication in the market like one indicated by the Marbouzu candles. This clearly indicates that some of the Japanese candlesticks are unrealistic and cannot be used to determine price movement in the market.

Another  disadvantage with Japanese candlesticks  is that they are many thus  if one needs to use them he or she will need to remember the shapes of each type, the prediction value and the names including the  formation of two  combined  candles. This appears to be a tedious work especially when two Japanese candlesticks types are combined because the end results will be hard to predict and this is where Japanese candlesticks begin to suck.

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