Now we are getting used to think in terms of supply and demand,
it won't be hard to read the chart and tell what is happening in any single phase.
Here we have dollar Japanese yen on a daily chart.
I have coloured in pink the periods when the market is moving down and in green the periods when the market
is moving up.
So you can see that we have a first part on the left where the price goes down and there are strong
red candles. Then we meet the first bullish period that you can see in green.
One thing you can notice is that every time that sellers step in the market, buyers' reaction is always
stronger.
Look at the few red candles during this period and look at the green candles that follow.
It's easy to see that buyers are completely in control. At one point, the price becomes very attractive
for sellers and you can see this from the first candles of the new bearish period that pushed the price
down of almost 400 pips. After one month,
the demand for the currency pair starts to increase and we see the price going up again. Once again, you
can notice that the moves made by the sellers are very weak compared to the moves made by the buyers.
So how can I say this?
Take a look at the candles.
More specifically take a look at the bodies of the candles.
When sellers try to take control, they and the session with a few pips below the opening,
so you see very small real bodies. When buyers take control,
the session ends with 50, 60, 70 or even more pips above the opening.
So buyers are making stronger moves during this period.
At the end of the chart we have another zone where supply seems to be higher than the demand and sellers
are in control.
The price is going down and there's no trace of buyers at the moment.
Now you can think: "well, everything seems to be reasonable,
but how can we know when buyers or sellers lose control of the market
and there's a change in the scenario?"
Or to put it in simple terms, how can we know when the trend is changing and when it is confirmed?
Starting from now, till the end of the course,
we are going to try to answer this question,
studying the behavior of the key players on the market through the study of the candlestick patterns.