The market price of each movement in a certain period of time can be represented in the form of candles, possessing the opening, closing, high and low prices. Appearing one after another, Japanese candlesticks show traders information about the market movement. But as it is well known, analysis of Japanese candlesticks is subjective and even the brightest candle patterns are not always triggered with absolute precision. Therefore, analysis of individual candles and their combinations has some features.
1. The place where candle pattern occur
The first in the such feature of this type of analysis is the o place where candle pattern occur on chart. Prior to opening a position, you should carefully study the market situation that preceded appearance of combination of candles. For example, the pattern "dark cloud" that emerged near the strong resistance level, should be interpreted more as a reversal pattern rather than "bearish" absorption showed outside the scope of resistance. The same way, formation of "doji" after a prolonged trend is a much more significant model than if a candle occurs on a flat market.