Truly professional traders know that it is their responsibility to trade with the best and most useful tools possible in order to achieve the best results.
This may sound simplistic, but there are far too many amateur traders leaving a lot on the table because they don’t use tools that are easily available to them.
One of those tools is to use a Fibonacci retracement with Japanese candlesticks.
By combining the Japanese candlestick chart with their Fibonacci retracement charts, traders can determine where the best prices are for a support or resistance trade.
When looking at trends, Japanese candlesticks are the way to go. They show you the opening price, the high price, the low price, and the end price for a certain time period. If you are looking at the one-hour chart for example, then each candle will show you all of those prices for the entire hour that the candle was open.
This might give you a much better sense of the momentum of a currency pair at any given time. At the very least, it is a major improvement compared to just looking at the line graph for the currency pair. Spot a trend that you think you might want to jump on? Great! Now get the Fibonacci tool at the ready and start drawing some retracement lines from the spot where you believe the currency pair is going to make its move.
If you turn out to be right, then you are going to be very pleased that you took the time to work out where you thought retracements were likely to occur. If you are wrong, then at least you will have a data point on which you can base future trades.
Ultimately, by combining your knowledge of Fibonacci retracements and candlestick patterns, you get key clues as to price action movement. See below for an example:
The reason to combine Fibonacci retracement with Japanese candlesticks is that they simply provide so much more information than you could ever get from any other type of data. You will see so much more clearly how the pair is moving and what it has done in the past.
The shape of some of those candles can also be instructive as far as figuring out if the movements are likely to continue in the direction they have already been going or not. You might take the shape of those candles into consideration as you decide if now is the time to pull the trigger on your latest trade or not.
It is certainly not an easy choice for a lot of people, but at least you can come to the table with all of the possible information available at your disposal.
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