Japanese Candlestick Charting Techniques

The candelstick techniques we use today originated in the style of technical charting used by the Japanese for over 100 years before the West developed the bar and point and figure analysis systems. In the 1700s a Japanese man named Homma, a trader in the futures market, discovered that, although there was a link between price and the supply and demand of rice, the markets were strongly influenced by the emotions of the traders. He understood that when emotions played into the equation a vast difference between the value and the price of rice occurred. This difference between the value and the price is as applicable to stocks today as it was to rice in Japan centuries ago. The principles established by Homma are the basis for the candlestick chart analysis, which is used to measure market emotions towards a stock.

Japanese Candlestick Charting Techniques, Second Edition