In the world of trading and finance, the Japanese Candlesticks Charting technique is one of the most widely used technical analysis methods.
Originating from ancient Japan, this method has a fascinating history that spans several centuries. The technique was first developed in the 1600s and was used for trading rice. The Japanese traders used the technique to analyze the price movements of rice and predict future price trends. Over time, the technique gained popularity and was adopted for trading rice contracts from 1710.
The candlesticks used in this technique were initially used to display the absolute values of the open, high, low, and closing (OHLC) prices of rice over several days. This helped traders to visualize the price trends more clearly and predict future price movements.
As the popularity of the technique increased, the concept of different time frames emerged. For example, a 15-minute time frame would show the OHLC values of an instrument in each 15-minute period. This allowed traders to analyze price trends and make predictions more accurately.
The technique also gave rise to the concept of patterns. Traders started to identify patterns that indicated trend continuation or reversal. These patterns became an essential part of technical analysis and helped traders to make more informed decisions.
In short, it became a pictorial representation of demand and supply!