One of the very popular visual tools of technical analysis are the so called candlestick charts. It is assumed that they were developed in the 18 century by a rice trader named Munehisa Homma (1724-1803). In 1710 forward contracts (coupons) were introduced to rice trading in which the sellers could fix a price on a certain date in the future. Soon after the introduction a very active secondary market with this papers emerged on which Mr. Homma made a fortune with the help of analysing the psychology of the market participants. In 1755 he wrote a book The fountain of gold – the three monkeys records on money, which is considered the first book on the subject. In the book he postulated that the emotions of the traders have a big impact on price. His famous statements is that when everyone is negative prices will rise and vice versa. He described the rotation of Yang (growth) and Ying (fall) and that in both of them there is a little bit of the other. In his trading apart from prices he also used data on the weather and volume of transactions.

Candlestick charts have the advantage that they are very visual and the lowest, highest, opening and closing prices within a time interval can be quickly identified. They are used to determine trend reversals and establishing areas of support and resistance in the fall/growth in prices.

During the workshop we will get acquainted with the basics in candle stick charts and the main single and multiple candle patterns indicating a likely trend reversal. The chart patterns have very interesting names in Japanese such as morning and evening start, hammer, 3 white soldiers, hanging man, etc.