Comparison between East and West-technical analysis

A major advantage of candlestick charts is that they are composed of information similar to bar charts (i.e. opening, high, low, closing data), and all Western cartography techniques can be integrated to enhance candlestick chart signals.
Until the Japanese established candlestick chart technology, its use as a signal analysis method was sufficiently effective. But many analysts today believe that the best results come from combining Western drawing and technical analysis methods. As explained in the previous section, we suggest considering at least the lateral support line and resistance line together. But you may also incorporate technical indicators into your charts, such as vertical bar charts and some moving averages, for further confirmation.
There are certainly many Western tools and candlestick charts that traders can use. We suggest that you continue to use your preferred indicators and use candle charts to use, confirm, or filter indicator signals.
For example, if in theMACDThere is a bearish periodic divergence in the indicators, indicating a new high in prices, but not in the vertical bar chart. A bearish shooting star and a dark cloud cover appear on the chart, which increases the possibility of market reversal.

As seen in the above example, the candle chart shows the twisting signal after the lagging indicator. Despite being bearishMACDThe closing of the swallowing pattern of crossing and bearish is at the same price level, and the technical indicators triggered a signal nine hours later.
There is another way to use the signal provided by the candlestick chart: to exit the position. Imagine you are in an open transaction when a reversal signal or a cross star appears. You may need to reduce the trading range or completely withdraw from a market reversal that is opposite to your initial position.
Another possible way to increase the candle chart reversal signal is to interpret the vertical bar chart of the overbought and oversold market conditions. The following figure shows the trading situation represented by random indicators. The candlestick chart has two reversal signals at the same resistance level. But in the first candlestick chart, the technical indicators are42%This line, but the second one is located on82%This horizontal line - that is to say, there has been overbought. This is an obvious example where two tools overlap when unifying signals.

The use of Bollinger lines, like candlesticks, is very consistent because they are used to measure when the market reaches extreme price levels. The following chart shows a hammer line for the US dollar index in the main support areas. Also, pay attention to how the hammer chart completely fades out of the lower Bollinger chart, adding more evidence of impending changes in price trends.
However, in order to enter the market, these triple confirmations are still not enough —— What else is quite important? The answer is —— Risk to return ratio. The bearish swallowing pattern may be used as the first object to provide a good ratio.

Using drawing techniques, you may say that a double bottom is forming. But this chart format requires32Break the confirmation line in hours. The bullish candlestick pattern that appeared in the previous support area provided an early entry signal.

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