Why Learn Candlestick Patterns? Explained!👨‍🏫

28 Sep 2022

1. Candlestick Chart Patterns Signal Earlier
Because its patterns constitute one candle or multiple, it signals much faster than classical technical analysis such as Moving Average (MA) and chart patterns such as triangles. Early signals inform us to close our open positions or initiate a new one, and both cases are beneficial.

2. Low risk
In candlestick charting techniques, the bottom of the top of the pattern acts as a support or resistance line. Compared to other charting techniques, such as classical chart patterns, the risk is much lower because you have to wait until the price breaks the support or resistance line.But, in candlestick patterns, you do not have to wait. Thus, using a candlestick chart, you can profit more by closing earlier and entering earlier.

3. Reading Candlestick Chart Is Easy
Every candle or combination of candles has something to say.For example, a doji means indecision. If it appears at the end of an extended trend, it implies that the current trend has lost strength. And market participants are in an indecision moment. Thus, a counterattack is enough to change the direction.

4. Candlestick Chart Patterns Are Reliable
Candlestick chart patterns are reliable if used properly. I mean that traders should look at broader pictures to make a decision on what a candlestick pattern says.For example, supporting signals should confirm a pattern. And if there is no confirmation, it is better to avoid trading.

5. Learning Candlestick Charting Is Easy
Learning candlestick chart techniques is easy due to the body and shadows of candles. Any size of tails and candles transfers a meaning. For example, a long body without shadows indicates that drivers are potent, and 4-price doji means that bulls and bears are equal in power.

6. Candles Can Help Other Techniques
You can use candles with every other tool and technique. It is complementary to technical indicators and confirms their signals.

7. Studying Charts Become Easier
Learning history is easy with candlesticks. For example, if you want to study the GDP impacts on a specific financial asset, you can find all of them and conclude.

8. Candlestick Charting Is the Best Option For Day traders
Day traders open and close their position on the same day. So, they need technical analysis that triggers signals quicker to initiate a new one or close their current position.Candlestick patterns signals faster than any other.

The disadvantage of Candlestick Chart Patterns
Everything has good and bad sides. Candlestick chart is no exception. Probably the biggest disadvantage of candlestick chart patterns is that they do not define take-profit level. However, you offset it by using other tools such as Fibonacci retracement. As mentioned earlier, you can combine candles with other techniques to validate your analysis.

Final Words
Candlestick chart analysis is a great method for the examination of financial assets.The best way to use it is to combine it with other tools and experiences.