Currency trading has recently gotten a new spurt of popularity with the advent of Forex trading. Currency trading has a much different dynamic than stock market trading. The major advantage of currency trading is that once a long-term trend takes hold, the trend will move in the same direction for long periods of time, for weeks and months. Candlestick signals work very effectively in currency trading. The same investor sentiment found in stock trading is also found in the candlestick signals when analyzing currency trading.
Being able to analyze the direction of a currency dramatically improves Forex trading results. Forex trading can be broken down into very simple analytical features. The candlestick signals easily identify the direction of a specific currency trend. Due to the simple nature of candlestick analysis, being a completely visual process, the evaluation of the different currencies can easily be applied to a Forex trade. Currency trading is nothing more than exploiting the information that the candlestick signals reveal. If the dollar is moving up, and the British pound is trading down as can be identified with the candlestick signals, the Forex trade set up is very simple.
Use the information that is provided by the candlestick signals. Currency trading is a very simple process once understanding what the Japanese Rice traders projected for investor sentiment. This same investor sentiment works on all trading entities. Understanding and identifying candlestick reversal or continuation signals helps pinpoint the optimal times to buy and sell. Understanding the investor sentiment that creates the candlestick formations allows an investor to project the direction of specific currencies against each other.
Join us each week in our live internet stock chat as we continue our free training on Trading with Japanese Candlesticks. This week’s article introduces the “In Neck Line” a Bearish Continuation Pattern.
IN NECK LINE
(iri kubi)
Description
The In Neck pattern is almost a Meeting Line pattern. I t has the same description as the On Neck pattern except that it closes at or slightly above the previous day’s close. Confirmation is suggested. The In Neck Line indicates some short covering, but not a change in trend direction.
Criteria
- A long black candle forms in a downtrend
- The next day gaps down from the previous day’s close; however, the body is usually smaller than one seen in the Meeting Line pattern.
- The second day closes at the close or just slightly above the close of the previous day.
Pattern Psychology
This is the same scenario as the On Neck pattern. After a market has been moving in a downward direction, a long black candles enhances the downtrend. The next day opens lower, a small gap down, but the trend is halted by a move back up to the previous day’s low. The buyers in this up move should be uncomfortable that there was not more strength in the up move. The sellers step back in the next day to continue the downtrend.
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