In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. As a type of active management, it stands in contradiction to much of modern portfolio theory. The efficacy of technical analysis is disputed by the efficient-market hypothesis, which states that stock market prices are essentially unpredictable, and research on whether technical analysis offers any benefit has produced mixed results. It is distinguished from fundamental analysis, which considers a company's financial statements, health, and the overall state of the market and economy.
Seiki Shimizu is best known for his work as an author writing about Japanese candlestick charting techniques used to analyze and evaluate stocks in his highly regarded book The Japanese Chart of Charts. After graduating from university, Shimizu joined the securities industry before moving to the commodity trading industry to form his own company, Kanetsu Shoji Co., Ltd shortly after World War II. He was awarded the Blue Ribbon Medal by the Japanese Emperor Hirohito in 1984 for his contributions to the Japanese commodity futures industry.
A chart pattern or price pattern is a pattern within a chart when prices are graphed. In stock and commodity markets trading, chart pattern studies play a large role during technical analysis. When data is plotted there is usually a pattern which naturally occurs and repeats over a period. Chart patterns are used as either reversal or continuation signals.
The hikkake pattern, or hikkake, is a technical analysis pattern used for determining market turning-points and continuations. It is a simple pattern that can be observed in market price data, using traditional bar charts, point and figure charts, or Japanese candlestick charts. The pattern does not belong to the collection of traditional candlestick chart patterns.
Candle making was developed independently in a number of countries around the world.
The Kagi chart is a chart used for tracking price movements and to make decisions on purchasing stock. It differs from traditional stock charts such as the Candlestick chart by being mostly independent of time. This feature aids in producing a chart that reduces random noise.
Munehisa Honma was a rice merchant from Sakata, Japan who traded in the Dōjima Rice Exchange in Osaka during the Tokugawa Shogunate. He is sometimes considered to be the father of the candlestick chart, a form of technical analysis used in stock markets.
Three crows is a term used by stock market analysts to describe a market downturn. It appears on a candlestick chart in the financial markets. It unfolds across three trading sessions, and consists of three long candlesticks that trend downward like a staircase. Each candle should open below the previous day's open, ideally in the middle price range of that previous day. Each candlestick should also close progressively downward to establish a new near-term low. The pattern indicates a strong price reversal from a bull market to a bear market.
An open-high-low-close chart is a type of chart typically used in Technical analysis to illustrate movements in the price of a financial instrument over time. Each vertical line on the chart shows the price range over one unit of time, e.g., one day or one hour. Tick marks project from each side of the line indicating the opening price on the left, and the closing price for that time period on the right. The bars may be shown in different hues depending on whether prices rose or fell in that period.
The doji is a commonly found pattern in a candlestick chart of financially traded assets in technical analysis. It is characterized by being small in length—meaning a small trading range—with an opening and closing price that are virtually equal. The efficacy of technical analysis is disputed by the efficient-market hypothesis, which states that stock market prices are essentially unpredictable.
The Morning Star is a pattern seen in a candlestick chart, a popular type of a chart used by technical analysts to anticipate or predict price action of a security, derivative, or currency over a short period of time.
A gap is defined as an unfilled space or interval. On a technical analysis chart, a gap represents an area where no trading takes place. On the Japanese candlestick chart, a window is interpreted as a gap.
In both stock trading and financial technical analysis, an island reversal is a candlestick pattern with compact trading activity within a range of prices, separated from the move preceding it. A "candlestick pattern" is a movement in prices shown graphically on a candlestick chart. This separation shown on the chart, is said to be caused by an exhaustion gap and the subsequent move in the opposite direction occurs as a result of a breakaway gap.
Ichimoku Kinko Hyo (IKH) (Japanese: 一目均衡表, Hepburn: Ichimoku Kinkō Hyō), usually shortened to "Ichimoku", is a technical analysis method that builds on candlestick charting to improve the accuracy of forecast price moves.
Three white soldiers is a candlestick chart pattern in the financial markets. It unfolds across three trading sessions and represents a strong price reversal from a bear market to a bull market. The pattern consists of three long candlesticks that trend upward like a staircase; each should open above the previous day's open, ideally in the middle price range of that previous day. Each candlestick should also close progressively upward to establish a new near-term high.
In financial technical analysis, a candlestick pattern is a movement in prices shown graphically on a candlestick chart that some believe can help to identify repeating patterns of a particular market movement. The recognition of the pattern is subjective and programs that are used for charting have to rely on predefined rules to match the pattern. There are 42 recognized patterns that can be split into simple and complex patterns. Author Thomas Bulkowski takes an in-depth look at 103 candlestick formations, from identification guidelines and statistical analysis of their behaviour to detailed trading tactics. He makes important discoveries and statistical summaries, as well as a glossary of relevant terms and a visual index to make candlestick identification easy.
Price action is a method of analysis of the basic price movements to generate trade entry and exit signals that is considered reliable while not requiring the use of indicators. It is a form of technical analysis, as it ignores the fundamental factors of a security and looks primarily at the security's price history. However, this method is different from other forms of technical analysis, as it focuses on the relation of the security's current price to its price history, which consists of all price movements, as opposed to values derived from the price history.
A Renko chart is a type of financial chart of Japanese origin used in technical analysis that measures and plots price changes. A renko chart consists of bricks, which proponents say more clearly show market trends and increase the signal-to-noise ratio compared to typical candlestick charts.
Heikin-Ashi is a Japanese trading indicator and financial chart that means "average bar". Heikin-Ashi charts resemble candlestick charts, but have a smoother appearance as they track a range of price movements, rather than tracking every price movement as with candlesticks. Heikin-Ashi was created in the 1700s by Munehisa Homma, who also created the candlestick chart. These charts are used by traders and investors to help determine and predict price movements.
A line break chart, also known as a three-line break chart, is a Japanese trading indicator and chart used to analyze the financial markets. Invented in Japan, these charts had been used for over 150 years by traders there before being popularized by Steve Nison in the book Beyond Candlesticks. The chart is made up of vertical blocks or bars called "lines", which indicate the market's direction.
