chart trading reading

[bigdolly]

I assume it’s important to pay attention to all aspects of charts.
For instance if you use a Japanese candlesticks chart then you can look at the size of the candle’s body or even the wig. If the wig is long then it could be a sign of price reversal within the next candles.

Timeframes are also important to look at. If you trade on a 1 hour timeframe then I believe it’s recommended to follow the H4 and M30 timeframes too. Just to be aware of what is happening with the higher/lower trends.
Eventually the number of trading signals taken from charts is limitless. Everything is up to your level of expertise.

if you take raw price data construct candlesticks by shifting start time to even 1 sec you can get completely different candlesticks. Where old ones indicated some pressure (bullish or bearish, based on candle patterns) around particular time, new candlesticks may indicate there is no such pressure. This reasoning shows that candlesticks and genuine bullish/bearish pressures are likely unrelated events.

 

[chen2020]

if you take raw price data construct candlesticks by shifting start time to even 1 sec you can get completely different candlesticks. Where old ones indicated some pressure (bullish or bearish, based on candle patterns) around particular time, new candlesticks may indicate there is no such pressure. This reasoning shows that candlesticks and genuine bullish/bearish pressures are likely unrelated events.

Could you confirm if the construction of candlesticks using raw price data, with a shift in start time even by just 1 second, can indeed result in completely different candlesticks?

 

[bigdolly]

Could you confirm if the construction of candlesticks using raw price data, with a shift in start time even by just 1 second, can indeed result in completely different candlesticks?

Of course! Suppose we want to show that the pair of 1M candlesticks (green, red), becomes the pair of (red, green) after shifting the start time of candlesticks by 1 second forward.

For simplicity, let's assume also that frequency of price updates is 1 second.

Condition for candle being green: Close - Open > 0

Condition for candle being red: Close - Open < 0

Let Close(1), Open(1) - close and open prices of the first candlestick,

Close(2), Open(2) - of the second candlestick

The original pair (green, red), implies that Close(1) - Open(1) > 0, Close(2) - Open(2) < 0

The new pair (red, green), implies that Close(1) - Open(1) < 0, Close(2) - Open(2) > 0

Let newOpen(1) - first second observation of the first candlestick, newOpen(2) - first second observation of the second candlestick. newOpen(3) - first second observation of the third candlestick

Our hypothesis is true if the following conditions are met (check yourself):

newOpen(2) < newOpen(1) < High(1) and

NewOpen(3) > NewOpen(2) > Low(2)

Constructing candles:

Suppose that OHLC(1) = (100, 107, 95, 104). Clearly 104-100 > 0. Green candle.

OHLC(2) = (104, 106, 95, 100). 100 - 104 < 0. Red candle

Suppose newOpen(1) - 106, newOpen(2) - 98, newOpen(3) - 102

So we get:

newOHLC(1) = (106, 107, 95, 98). Red candle

newOHLC(2) = (98, 106, 95, 102). Green candle.