Reading Candlestick Chart Patterns
February 21st, 2010 | by real |forex trading made ez
Candlestick patterns are customary indicators that help a trader to investigate candlestick charts. They are quite important when one is engaged in the setting up of basic systems that help indicate a trend formation so you can begin trading.
The open, high, low, close rate of the stock, commodity or currency over a period of time is displayed in the candlestick form. The period covered is generally user selectable.
The ecommended time period is 5 minutes but you may desire in some situations to utilize 15 minutes. For longer duration trading you can choose longer periods.
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The body of the candle points the difference between the open and close points. If it’s green/blue (for colored charts) or white then the lower boundaries of the rectangular body is the open and price went upwards during the respective period. If it is black (or red on a colored chart then the opening price is the top boundary and the price went down.
In candles, vertical lines sticking up from the top and down from the bottom are called wicks. The highest value ever obtained during the period is the top of the upper wick section. Contrastingly, the lowest price is the bottom of the lower wick area.
This style of analysis allows the trader to know at a glance if values tumbled or went up during the analysis time frame. Bear markets are illustrated by green or white candles whilst bull markets are represented by red or black candles.
You can also inspect at a glance how the highs and lows compare to the opening and closing market prices. You might have a candle that is absolutely solid, sans the wick.
This is referred to as the Marubozu pattern. Prices never went higher or lower than the opening and closing prices in this scenario.
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he high value as opening price and low value as closing price is represented by the red or black candle. The low price is the open and the close is the high price when the candle is green or white.
A relatively even upward or downward trend is defined by a long body. A reversal is designated by a long wick on the top or on the bottom.
A candlestick has to be read along with the previous ones in order to ensure precise trending. Then you can devise more complex candlestick patterns signifying the anticipated trends to come.
Disclaimer: Forex investing is risky, can end up in significant losses, and is not right for every person.
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