Quote from investmentlink:
1. Leading Indicator
They have the ability to show reversal signals earlier then Western charting techniques. As such candlestick charts are a true leading indicator of market action.
2. Pictorial
They are very pictorial and describe the state of players' psychology the moment they unfold, all of which can be utilised to make meaningful trading decisions. It consists of hundreds of different pattern groups that accurately identify specific traits and tendencies.
3. Versatile
They can used alone or in combination with western technical tools. It prometes the ability to recognise complex pattern groups and predict the next possible outcome based on them.
4. Can Be Applied To Any Time-Dimension
It can be adapted for either short or long term trading (intraday, daily, weekly & monthly charts).
5. Flexibility & Adaptability
Can be applied to follow as many market desire - be it stocks, futures, currency or commodity.
6. Time Tested Dependable & Useful
Had been refined by generations of use in Japan. The fact that it is still very much in use today after more than 300 years since its discovery is testimony to its usefulness.
by Steve Nelson
I strongly disagree with some of Nison's statements.
With that said, I think the reasons why Japanese Candlestick pattern analysis (I'm not talking about candlestick charts) is popular is because of
marketing.
However, I said it's popular and I didn't say it was the most popular.
I just see too many traditional indicators (CCI, RSI, MACD, Stoch, Moving Averages et cetera) that are much more popular based upon the number of discussions and the chart examples being posted at different forums on the internet...
Easier to discuss.
Regardless, most using candlestick
patterns are using them incorrectly and there are a few well documented threads here at ET in the past that clearly show misconceptions, inaccurate interpretations, inaccurate application et cetera.
Thus, I think the love affair with Japanese Candlesticks is easily lost in comparison to traders having the same problems with traditional western analysis.
Think about it, if CCI isn't working well...traders will change a setting or tweak it.
However, few have the same tolerance when they have problems with Japanese Candlestick analysis.
Further, most traders using candlestick
charts aren't even doing any Japanese Candlestick Analysis.
Simply, bar charts has the same price action as candlestick charts.
My primary methodology doesn't involve candlestick patterns but I do prefer candlestick charts instead of bar charts or any other types of charts.
Candlestick charts just look nicer...it's a preference.
Also, there are a
few reliable patterns.
Mark
(a.k.a.
NihabaAshi) Japanese Candlestick term
