Japanese Candlestick Charting Techniques

SOME BACKGROUND
Some of you may have already heard of candlecharts. Probably, many
more of you have not. In December 1989, I wrote an introductory article
on candlesticks that precipitated an immediate groundswell of interest.
It turned out that I was one of the few Americans familiar with this
centuries-old Japanese technique. I wrote follow-up articles, gave
numerous presentations, taught classes, and was interviewed on television
and by newspapers across the country. In early 1990, I wrote a short
reference piece for my Chartered Market Technician thesis about candlestick
charts. It contained very basic introductory material, but it was the
only readily available information on candlestick charts in the United
States. This handout became very popular. Within a few months, Merrill
Lynch, the publisher of the booklet, received over 10,000 requests.
HOW I LEARNED ABOUT CANDLESTICK CHARTS
“Why,” I have often asked myself, “has a system which has been
around so long almost completely unknown in the West?” Were the Japanese
trying to keep it secret? Was it the lack of information in the
United States? I don’t know the answer, but it has taken years of
research to fit all the pieces together. I was fortunate in several ways.Perhaps my perseverance and serendipity were the unique combination
needed that others did not have.
In 1987, I became acquainted with a Japanese broker. One day, while
I was with her in her office, she was looking at one of her Japanese stock
chart books (Japanese chart books are in candlestick form). She
exclaimed, “look, a window.” I asked what she was talking about. She
told me a window was the same as a gap in Western technicals. She went
on to explain that while Western technicians use the expression “filling
in the gap” the Japanese would say “closing the window.” She then
used other expresions like, “doji” and “dark-cloud cover.” I was
hooked. I spent the next few years exploring, researching, and analyzing
anything I could about candlestick charts…. …

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