February 23rd, 2010 | 
Author: forex trading made ez
One of the vital indicators that assist traders understand candlestick charts are candlestick patterns. They are quite indispensable when one is engaged in the creation of basic systems that help indicate a trend formation so you can start trading.
The shape of the candlesticks attest the high, low, open and closing price of stocks, currencies or commodities during a specific period. You can mostly choose the time frame that you want to show.
Day traders typically choose 5 minutes however 15 minutes may be your selection for some cases. Usually, longer periods are applied for longer term trading.
bill poulos
The body of the candle points the difference between the open and close prices. If it’s green/blue (for colored charts) or white then the lower borders of the rectangular body is the open and price went up during the consideration period. A red (for colored charts) or black indicates the top boundary is the opening price, whilst the price diminished during that period.
In candles, vertical lines pointing up from the top and down from the bottom are called wicks. The top of the upper part of wick is the highest spot that the price ever hit during the period. The bottom of the lower wick is the low.
This kind of analysis assists the trader to know at a glance if values dipped or went up during the analysis time frame. Bearish tendencies or rise in price are represented by green or white candles while bullish tendencies or fall in price would be pointed out by red or black candles.
Aside from this, the high and low comparably to open and close prices are instantly evident. Then you may have an entirely definite candle without a wick.
The name for this is Marubozu pattern. In this situation the market prices never went lower or higher than their opening and closing stands.
forexmentor
If the shape is black or red, the opening market price was the high and the closing value was the low. If it is white or green, the opening value was the low and the closing market price was the high.
A relatively constant upward or downward trend is defined by a long body. A reversal is determined by a long wick on the top or on the bottom.
In conclusion, to ensure precise trend reading, candlestick must be read within the context of the preceding candlesticks. From there relatively intricate trends can be devised to demonstrate the trends in the future.
Notice: Currency trading can be dangerous, may result in substantial losses, and is not right for everybody.
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