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Technical Analysis: Candlestick Chart Basics

Watch this RJOF Quick Tips: Candlestick Chart Basics video presented by our Senior Market Strategist, Eli Tesfaye to learn what candlestick charting is and how to implement it in your futures trading plan. 

 

What is Candlestick Charting?

It is a tool of technical analysis and charting which originated in Japan and is now widely used to gauge market sentiments. Unlike western bar charting tool, candlestick charts give traders a better visual interpretation of the high, low, open and close. By looking at the real body of the single candle in relation of other candles, traders can get a visual sense as to who is in control of price—bears or bulls. Often times when the open and close are the same, it is considered the market is uncertain over which direction to take.

 

Candlestick Charting and the Futures Markets

To enrich your overall trading experience, it is helpful to add candlestick charting to your trading toolbox. Using candlestick charting to study price behavior is beneficial in discerning traders' overall sentiment. There are many candlestick patterns to consider in your futures trading decision. It is important to learn a few candlestick patterns to make a more knowledgeable trade.

 

When to Use Candlestick Charting

Although you can use candlestick charting on any futures contract, it’s more affective on futures contracts with higher volumes in order to get better reading. Although you can use candlestick for trend continuation, it is mostly used to predict trend reversals.  

 


 

 

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This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.