Japanese Candlestick charts originated during the 18th century in Japan. Because there is no defined currency standard existed in Japan during this time rice represented a medium of exchange. As time goes by, it evolved to a candlesticks. The method was preserved by popular technician Charles Dow around 1900 and remains arguably the most popular form of technical analysis chart in use by today’s traders of financial instruments.

Candlestick charts show the same information compared to the Western bar charts but in a graphical format that provides a more precise and accurate representation of price action.These charts visually display the supply and demand situation by revealing whether it is bullish or bearish. Candlestick charts provides another scenario of the given period’s price action by visually displaying the action behind each price of the bar movement. Its formations make all single bar and multi bar patterns easily spotted in real time, thus allowing to increase the chances of catching high probability trade setups. In addition, because candlestick charts used the same data as the Western bar charts ,all Western technical signals used on a bar chart can easily be applied to a candlestick chart. Candlestick charts offer everything a Western bar charts do and more.

The video above provides a perfect summary of what is a Japanese candlestick is all about. It gives a concrete examples with explanations on how candlesticks are used and the terms being associated with it. It is very helpful to traders especially the new ones so that they can have a better understanding with Forex charts, both western and Japanese.