Forex Investment and Currency Trading

History of Candle Charts

Technique originally devised by 18th Century Japanese Rice Traders
Underlying theory based upon market positioning/psychology
Commonly used since late 19th Century in the Far East
Only recently adopted in Western countries, since early 1990s
Since then the interest in and use of this method of analyzing financial and commodity markets has increased dramatically

A Candlestick
Can be used to display market movement for any period providing the open, close, high and low prices of the period are available.

Market “UP’ Day
Market closes higher than it opens

Market “DOWN” Day
Market closes lower than it opens

Market “NO-CHANGE” Day
Market closes where it opens

The Pattern

Pattern Definition
Market opens and closes [...]

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EURUSD: EURUSD clearly breached the trend across the Oct-Nov lows that provided support until today. The next support levels are at 1.2549, 1.2484 - 1.2423 area (from 2006 lows), 1.2388 and 1.2329 (Oct low).
It is still unclear whether all these levels will be tested. The trend across the lows in Jan and Feb comes in at 1.26 and it is worth watching the momentum indicator as it appears to be developing positive momentum divergence, which has NOT been confirmed yet. (If the divergence pattern does form, it will reflect weakness in the trend down). A breach of 1.2549 would likely [...]

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GBPUSD: Support area holding so far

GBPUSD: Testing good support around 1.4350 – 75 where the market has turned on many occasions since the Dec 31st low. A hold of this would suggest a test of resistance levels at 1.4982/6 while a breach would indicate further ST weakness towards 1.4153 and possibly 1.4052. Overall out bullish bias is still in place though we have to respect the size of the correction down in the ST. Over time we expect resistance levels to be tested.
EURGBP – Good correction up but bearish setup still in place

EURGBP: While we cannot ignore the bullish reversal [...]

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The head and shoulders pattern targets 9.22

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