Is this the EASIEST Forex Strategy EVER?! Explaining the Japanese Candlestick Patterns!


Candlestick trading is the most common and
the most easy-to-understand form of trading that there is today. But are you
getting the most out of what the candlesticks are showing you and are you
using them in the best way? come on let’s explore five oaks now
today we’re going to be looking at the all-important Japanese candlestick
charts and why if you understand what they’re showing you can make your life a
whole lot easier as a trader now not only do they give you a possible insight
into what prices may be doing next but they can also be used to define the
exact rules of entry and exits and I found over the years many aspiring
traders struggle with just that so having some definable victory based on
candlestick patterns can really help the aspiring trader now before I continue
let me first remind you that I now stream live on Facebook
every Monday at 2:00 p.m. London time so you can watch me put all my teachings
into a live trading environment now just follow the link above and you’ll be
getting straight in there for next Monday also don’t forget to subscribe to
the channel here at YouTube if you don’t already do so and click that little bell
icon and that way you’re gonna get an alert at the moment I release my next
video ok let’s get straight into it okay so before we get into the specifics of
the candlestick chart and patterns that are thrown up I want to explain to you
the three different chart types that traders use when they’re training in the
markets basically you’ve got the line chart the bar chart and of course the
candlestick chart now as with any chart you normally have the time on the
horizontal axis and price is on the vertical axis same with our trading
charts here you can see the line chart now the line chart consists of a single
line and the single line is plotted by looking at the closing price in a
particular time period being a five minute time period or an hourly or
weekly or so forth so ignores the price extremes the highs and the lows in that
particular time period it only focuses on the closing price so powerful if you
use these looking for key turning points
especially on the high team timeframes like the daily and the weekly then
you’ve got the bar chart now the bar chart shows you a bit more information
than the line chart it shows you where it opened it shows you where it closed
you get to see a picture of where the market is going it doesn’t show you as
much as the candlestick chart but it shows you slightly more than the line
chart shows you price extremes highs and lows and so forth I find that a little
bit hard sometimes to actually predict trend by looking at that but of course
that is a matter of preference then of course you’ve got the all-important
candlestick chart this shows us much more information and when you plot these
candles together against each other they can be quite powerful in predicting the
future price movements have a look at them now in more detail ok so as we know
markets are moved by human behavior buyers move the market up and sellers
move the market down now the candlestick chart shows us basically who is winning
the battle in a particular time period are the buyers more in control or the
sellers more in control and the kind of stick charts shows us a good
visualization of just that now a candlestick chart is typically colored
blue or sometimes green if the buyers have control if the market opens down
here and then moves all the way back up and closes here that basically means the
buyers were in control so if the market closes higher at the mode opened the
candle will be colored blue and the example here if the market opened up
here and then trades down because the sellers had control and closes down here
typically the candle will be colored red so it closes lower than where it opened
now also on a candlestick chart you sure you have these what are known as shadows
all wicks it shows you where price went to in that particular time period so for
example here market would have opened traded down to possibly down here and
then right back up buyers took control the buyers are winning this particular
candle up to a high up here and then some sellers come in and it closes back
down here so this is a bullish candle and exactly the same on the other candle
here the reverse market opens here potentially trades up a little bit and
then trades down the sellers have control takes it down to this new low
down here then some buyers come in and it closes here
the sellers won that particular candle sellers were more prevalent than the
buyers in that particular time period so candlestick chart shows you the open the
close the high and indeed the low so lots of information going on on one
particular candle now looking at a particular candle on its own isn’t the
best way to do it you need to be looking at these candles in conjunction with
other candles surrounding it and also at key levels key levels of support and
resistance and when you match these together it can give you a very good
indication of where price may go in the future can also give you a good entry
and exit levels as I previously discussed let me explore okay so these
are the main patterns that we look at in our trading certainly the ones that we
look at in the strategies that we trade live every day in our trading very
simple to understand let me briefly explain exactly what they’re showing you
so here you’ve got a bullish engulfing pattern this basically means that the
candle to the right fully engulfs the candle to the left so
here the market opened up here went to this high created back down to this low
close down here puts in this candle here this bearish candle now the next candle
opens it and fully trades down but then fully engulfs the previous candle this
is a bullish candle this indicates that the market is going to go up and move to
the upside now we look for these at key turning points at key levels of support
and resistance if you see one of these coming in at a support zone that is a
good high probability that that is going to be leading to a move to the upside
and as I said you can use these candlesticks for entries and exits so
typically your strategy in fact one of the strategies we use we’ll look at this
precisely this way we would look to enter at a break above this particular
higher this candle and our stop could be halfway down the bullish candle or
indeed could be a few pips below the base of this so it leaves nothing to the
imagination you’ve got some define rules enter at the break of the high with a
stop at the break of the low now we’ve got the bearish engulfing exactly the
same but in the opposite direction here you’ve got a bullish candle but then the
candle to the right fully engulfed slits and closes lower fully engulfing the
previous candle this is a bearish candle looking for a move to the low side when
you see a bearish engulfing at a key level of resistance up here for example
this gives you a high probability that this market is going to trade down and
as I say you have two defined rules of entry as well with your strategy you
could enter at the break of this low of the engulfing candle or you could have
and you can have your stop at above the high of the engulfing candle as well you
may have a strategy that uses 50% of that cap but again you’ve got some
defined rules that you can lock in to them a very powerful turning point the
bearish and golfer at key levels of resistance then you’ve got the hammer
candles you’ve got the inverted hammer and the hammer candle okay basically
this shows you that this sellers were and controlled markets opened here it
moved up but then closed right the way down so opens here closes here market
moves up and then the sellers take control and they push price back down
for a lower close than where it opened this is a very bearish candle this is a
rejection candle it’s rejecting a level up here this could indicate a move to
the low side a very simple candlestick pattern that can be very very powerful
in picking turning points you can also use this inverted hammer with the trend
as well if the market is trending down and you see one of these hammer candles
come in or ie a break higher but then choices back down again that indicates
that the buyers basically ran out of steam
the sellers took control and continuing on down with the trend exact reverse for
the hammer candle this is here and the buyers took control to the market Oh
here trades all the way down so the sellers have control then the buyers
come back in take control and push the market higher again this is a blue
hammer candle it’s a bullish hammer candle it’s
showing you that the buyers are in control and the price down here was
rejected this level of support is now being respected and of course prices
took off in the northerly direction a very bullish candle can be used to pick
turning points in a downtrend if you see this at the bottom of a downtrend then
this could indicate that the move is now going to be up the also is very good in
the in the in the trendy markets if you see a market that’s trending up and then
you see one of these candles came in at break lower maybe the sellers have got
control but then closes up again this indicates that the market wants to
continue in that northerly direction a very very powerful candlestick pattern
when you take into consideration support and resistance with trend and counter
trend then you’ve got the old famous at doji now the doji represents an area of
indecision who won control of that particular time period
was it the Bulls was it the buyers was it the sellers
well clearly neither one control is an area of indecision indecision basically
means the market is undecided where it’s going to go so looking at the doji on
its own basically is not really the best way to play a doji it’s the best way the
player doji is looking at the next candle afterwards the next couple of
candles to see what price is actually doing mark is in undecided mode the next
couple of candles could be very crucial in terms of where the market might go
again so doji is again a very very powerful
cattle show you something maybe is about to happen if you see a number of these
doji’s and then a break higher and that indicates the market wants to push
higher if you see a number of these doji’s and then a break lower then it
indicates a potential roll back the market wants to trace out let’s look at
these now in a bit more detail okay so here we see a collection of candles now
clearly this is on the whiteboard and I put these examples out and they
obviously are going to work otherwise I’ll be wasting my time or what
show you the patterns where they are significant and where they work of
course what you need to do is go onto the world price chart and look for these
patterns at key levels of support and resistance to yourself to see them in
the real world and in fact straight off this whiteboard demonstration I’ll jump
onto the screens and show you an example in the Australian against the US dollar
on the 4-hour chart which is actually working quite well as we speak here
right – so we start off here markets trading up I’ve drawn here as you can
see some resistance and and support levels so we’re looking for price action
to expect these levels market here is just meandering what around we’re moving
up we now breach the level of resistance to the upside indicated by this dotted
line market trades up Bulls are in control and then the sellers come in and
push this market down that’s showing you that this level of resistance is being
respected that is a good indication in conjunction with the level of resistance
that this market wants to trade back down and of course as luck would have it
it is trading back down who are trading back down and we’re coming back in now
to the level of support level of support is broken with this bearish candle Bears
are in control the sellers are in control then it hits a wave of buying
and the buyers now are becoming more prevalent to the market demand is there
they’re pushing the prices up and it completely engulfs this previous bearish
candle which took us through in the first place this is a bullish pattern at
a level of support so this market now looks as though it wants to trade up
indeed that’s exactly what happens let me come into these candles remember what
these are called these are the doji candles these are the areas of
indecision the market doesn’t quite know what is
gonna what it wants to do just coming into the level of resistance we put in a
couple of doji’s and then indeed we break lower to the low side of the doji
indicates that potentially the down trend will continue so after an era of
indecision the next candle is crucial that shows us that the market now wants
to potentially move back down and indeed it does okay so now we come back into
this level of support trades through the level
support looks as though the payers are in control looks as though the sellers
have control but then the wave of buying comes back in and pushes price back up
for a bullish hammer hammer candle they’re depicted by the body of the
candle the main body of the candle being in the top third of the whole range of
that candle that’s a bullish hammer at a level of support market now wants to
move back up again has a bit of a wobble here market trades down comes back down
engulfs that candle but then trades up again so this is now a British hammer
with the trend this is against the trend you see here trend is down up this is
with the trend so these hammer candles inverted and hammer candles can work in
both directions with and counter trend machi moves back up again through the
level of resistance looks as though it wants to go higher and then this next
candle completely engulfs this candle at the level of resistance indicating that
this uptrend has now come to an end and looking to move back down again as I
said you can use these candles for levels of entry so for example if you up
here and you want to take this advantage take this tray to the downside you may
have a stop say at 50% of the hammer cans the inverted hammer count all you
might want you stop above the high of the hammer candle same back down here if
you take this long trade here you might want to stop below here again defined
reasons why to exit and enter the trade again if you’re trading these doji’s you
may wish to enter the break of the doji’s with a stop the other side of the
doji saying back down here the hammer you may wish to enter as the break of
the hammer candle or indeed if it pulls back to 50% with the stop below so you
can use these hammer candles as I say all these candlestick patterns as anchor
points to enter and exit and so forth what we’re now going to jump on to the
screen so I’m going to show you a live chart as of today the day of recording I
just looked before I came into the studio here and it’s the Aussie against
the US dollar just show it in real time but I encourage you to go and do your
own analysis look at a price chart to see if indeed you can spot these
patterns and how powerful they are come on let’s go okay so that was a quick
demonstration on the white Lord showing you the patterns that we
look for in our trading now they’re very simple to spot once you know what you’re
looking for I talked about these throughout my trading in the live
training room we’ve got a number of strategies that are based around these
candlestick patterns so do go and check that out when you can for now I just
want to jump onto a price chart to show you how these candlestick patterns give
us early warning signs at key levels of support and resistance come on okay so
what I’ve done here is drawn in some key levels of support and resistance and I
have simply highlighted the areas in green where price has respected these
levels putting in one of our patterns that we’ve discussed so if you look here
to the left market is moving up nicely it breaks through this level of
resistance now acting as support and indeed it comes back down into that
level of support puts in this bullish engulfing pattern that’s indicating that
this level of previous resistance or support is going to be respected and
indeed prices move back up again and here we see now back up to this next
level of resistance it holds it for one two three four five candles and then
puts in this bearish engulfing there’s big bearish engulfing which is the fifth
rejection of that level of resistance and we roll back again and back into the
level of support know your price action there up again and then back down into
this level of resistance is the market going to continue with the trend to the
downside it looks like it then it has this pull back in and then it has a
rejection of this old level of support now acting as resistance puts in this
bearish engulfing indicating this wants to roll back and then T there’s quite a
few pips to be had there finally does turn back and then back up again into
this level of resistance puts in this really powerful inverted hammer candle
there that shows you a rejection going on there doesn’t reject it too much it
does indeed have a second attempt at that level but then puts in the
confirmation this is the bearing golfer engulfing the previous two candles
following on from this candle hit that is a good indication and indeed their
last candle there that last inverted hammer can
in the case this really does one of our backs that’s a very powerful set up
there I think we took that in the room as well actually and then that one rolls
back down into the level of support puts in this hammer candle again and off we
go again to the upside back down again to the level of support here you’ll see
this little doji in here this is a four-hour doji indecision
are we going to continue through is it going to bounce back up next candle
confirmation that we’re looking to trade back up and then it puts in this hammer
candle in the direction of the previous bar indicates that this wants to roll
indeed back up to the highs of the resistance level and then we have this
again really powerful inverted hammer candle reaches through the level of
resistance and closes low off we go to the downside until we finally put in
this bullish in golfer at the bottom takes us up again to the resistance
level so the resistance levels and support levels have been respected you
enter when you see these candlestick patterns confirming here again we’ve got
we’ve got this pinball rejection and then the bearish par follows on and off
B roll back into support puts in this bullish pin bar confirmation that we
want to roll back again and indeed where we are now this is only a few hours ago
we’ve got this pin bar coming in so this is the rejection candle of this
resistant zone this is live now as we speak I’m not sure if it’s going to roll
back down and and confirm that this is a rejection but certainly this is a
bearish little pattern in here at the moment so as I say you can use these
pens and with trend with Calla trend you can use them for entries you can use
them for exit strategy now we have a number of strategies that use this type
of candlestick pattern formation we look for these all day long and our
livestreams we’ve also got some tools that actually find these patterns for
you and you can download those for your charge from the trading room
occasionally to attend the trading room seven day free trials do click the link
above should you wish to try us out I’m sure you won’t regret it when you can
see the power of these wouldn’t be amazing if you can accurately predict
the key turning points in a market and I
showcase this every day in our live streams okay so I hope you found that
useful hopefully now you can see the power behind these very simple Japanese
candlestick charts if you like my video give me a thumbs up if you didn’t give
me a thumbs down don’t forget to leave a comment and don’t forget to subscribe to
the channel if you haven’t already done so don’t forget that little belly icon
you’re gonna get notified the moment I release my next video you can follow us
on Instagram in the usual way more importantly don’t forget to follow me on
Facebook next Monday 2:00 p.m. on London time I’ll be streaming to you live
interacting with you and trading the markets right in front of you free to
attend for or turn the next video happy trading
good luck

78 thoughts on “Is this the EASIEST Forex Strategy EVER?! Explaining the Japanese Candlestick Patterns!”

  1. can you please explain to me if it's safe or not to leave a trade running during weekends ? should i be afraid of the potential gap that could occur in a forex market at the end of the weekend or not ? what do you usually do ? thanks in advance for your answer

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  3. Fantastic video yet again Andrew, very informative & concise, yet very easy to follow & understand a truly fantastic job well done amazing.

  4. I want to thank you for your time and help, since I have been watching your videos my success has improved greatly.. last week I was at $48,000 and I brought my account to over 50,000 as of today…

  5. Please record your live trading on Facebook and post it here on your Youtube channel as well, because not everybody can be with you live.I would really appreciate this, I am sure others to, thank you for your videos, very helpful.

  6. Thank you much Andrew. I have a request if you wish to consider. If it is possible, please have a live stream in both Facebook and Instagram. There might be some fans who do not have access to Facebook, and it is more convenient for them to watch your precious lessons via Instagram Live feature. Again thanks a lot for these lessons and hope see you on Instagram too.

  7. G’day Andrew. I’m a beginner and I currently watch only two or three key people to learn from – you are one of those. Mate, I really enjoy and appreciate your lessons. It’s clear you have an incredible amount of experience and skill, yet you manage to keep your lessons clear, simple and easy to understand (and implement). Thank you, and keep up the great work mate. Eric. Sydney, Australia.

  8. Fantastic. One of the best videos I've seen on using candle stick analysis. What it did was clarify for me WHEN to take signal (ie at a key level of support and resistance). Before this l would just try and trade a bullish engulfing candle any time I saw it without checking the context. No wonder l hour stopped out so much!

    Question: assuming you use this approach to take entries off the 4 hour chart, would you ensue that your trades were only in the direction of the dominant daily trend? Thanks.

  9. Great video. Emillie Scott is an amazing trader, she steadily lifted me out of financial penury. I started out with 8,750 USD and she made me 47,000 USD in a month. She's exceptional.

  10. Quick question; do I take the tails/shadows of candles in consideration, or do I act as if they were non existent? Your illustrations did not have any tails/shadows, that's why I'm asking. Great video, learned a lot!

  11. Sure the most helpful and simple rules finded in the last years in a "online mess scams" of training Forex stuff! Congratulations, please continue like this.

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  14. Your videos are so good. Thank you. Even when you are showing the basic and obvious it helps to reaffirm things I've learnt reading. The way you explain it is excellent👌

  15. amazing sir

    i am from Pakistan, lost 100£ in 2 days, then starting youtube videos, watched a first video of yours where everyone was criticizing you… but found your way of explaining simple and clear
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  17. Hello my name is Alex I just found your video and I’ve watched many before on you tube you explanation of the candles was the first time it has actually made any sense

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  18. It always seems that the best u can get is a 1 to 1 R:R ratio. Try and get any more and it's a waste of time! Is that why u go for 1:1 on the first Target? Aiming for 3:1 as taught by most seems ridiculous!

  19. This is an extremely helpful video. As a novice I've never really understood how candlestick patterns work until now. Thank you sir.

  20. This was exactly what I needed to see thank you so much for the video demonstration

  21. i have become obsessed with your videos, straight forward, easy to understand and make so much sense. thank you

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  23. FANTASTIC VIDEO! Concise, direct to the point, and very informative! I'm a FOREX Trader! I employ 'Price Action' Trading Philosophy or Methodology, and Your Video is truly SUBLIME! Your explanation of Candlesticks trading is very beneficial to ALL Forex Traders, especially to the beginners. KUDOS!

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