The Japanese candlestick charting technique dates back to the 1700s when bar charting and point-and-figure charting were not even discovered. Japanese traders, on the other hand, were already using this technique to trade their rice markets. Yet this technique of charting was confined strictly to Japan until the Americans discovered this technique from Japanese traders who traded the U.S. financial markets in the 1980s.
What fascinated the U.S. traders in the late 1980s was its uncanny trading accuracy in the purchase and sale of stocks, stock index and commodity futures, currency and treasury bonds on the New York and Chicago exchanges. Yet, the Americans were unaware of the techniques used by the Japanese. Strong interest emerged amongst the U.S. traders as to how the Japanese arrived at their buy and sell decisions.
They reasoned that if they were going to beat the Japanese at their game, the American traders would have to fully understand how the Japanese tradersâ minds worked. That entails knowing their charting technique. Understanding how Japanese traders use their charts would help the American traders answer the question âWhat are the Japanese going to do next?â This accounts for the resurgence of interest in the West into this previously obscure technique of technical analysis.
More information is now available on candlestick charting after extensive research by an American analyst, Steve Nison. His two books, Japanese Candlestick Charting Techniques and Beyond Candles, offered the outside world a first glimpse into this ancient methodology of the Japanese traders.
As Nisonâs research into this mystically obscure charting technique became available through his two books, traders in the United States and the rest of the world began to realise its forecasting value. When combined with Western technical concepts, forecasting and trading the markets can beâin the words of Steve Nisonâexciting, powerful, fun, and much more rewarding.
Even as recently as the late 1980s, real-time quote and chart services offered to investors in the United States, Europe, and the rest of the world did not feature candlestick chartsâonly bar charts. Yet within two years after Nisonâs first book, published in 1991, almost every real-time technical service and end-of-day technical analysis software package offered candlestick charts to their clients. In Malaysia, every major real-time technical chart service provider such as Thomson-Reuters, Bloomberg, Updata, Meta-Trader, and Bursa Station supports real-time candlestick charts. The inclusion candlestick charts into these companiesâ services underscores their popularity and usefulness.
â Historical Background
After the unification of Japan under the Tokugawa Shogunate (Eighth Shogunate) from 1615 to 1867, its agrarian economy grew. By the seventeenth century, Osaka was regarded as Japanâs capital and commercial centre. Osakaâs easy access to the sea made it a national port for the shipping of supplies, including rice. Strategically located, Osaka soon became the centre for the rice trade, and rice brokerage became the foundation of Osakaâs prosperity. The Dojima Rice Exchange became the centre of rice trade for physical delivery.
Into this background, Munehisa Homma (1716â1803) was born in the city of Sakata, Yamagata Prefecture, Japan. His real name was Kosaku Kato, but he took up the name Munehisa Homma later in his life after ...
