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Fundamental Chart Guides: Candlestick Patterns

Filed under: Uncategorized — emitaliablog
Posted on December 5, 2010 @ 2:24 pm
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The Disciplined Trader
One of the important indicators that aid traders understand candlestick charts are candlestick patterns. This can be accessible when making simple systems that will inform you when a trend is emerging so that you can begin a trade.

The open, high, low, close rate of the stock, commodity or currency over a period of time is illustrated in the candlestick form. This period can be picked by the trader.

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5 minutes is probable for day traders but you may opt for 15 minutes in some situations. Mostly, longer periods are exercised for longer term trading.

The candle body signifies the diversity of the close and open points. If it’s green/blue (for colored charts) or white then the lower bounds of the rectangular body is the open and price went upwards during the particular period. If it is black (or red on a colored chart then the opening price is the top boundary and the price plummeted.

Vertical lines poking up from top and down from the bottom are called wicks. The top of the upper segment of wick is the highest spot that the price ever attained during the period. The bottom of the lower wick is the low.

The trader can decide immediately the price behavior from this analytical method. Bearish tendencies or rise in price are evidenced by green or white candles while bullish trends or fall in price would be pointed out by red or black candles.

The association of open and close values to high and low values can be examined spontaneously. Then there is a solid candle without a wick.

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It’s called a Marubozu pattern. Prices never went greater or lower than the opening and closing prices in this case.

The opening was the high price or the closing was the reduced price if the candle was red or black. On the other hand, green or white candle signifies the low was the opening price while the high was the closing price.

A long body indicates a fairly steady direction either downward or upward. A reversal is marked by a long wick on the top or on the bottom.

In conclusion, to ensure exact trend reading, candlestick must be read within the context of the preceding candlesticks. From there relatively intricate trends can be actualized to demonstrate the trends in the future.

Notice: Forex trading is high-risk, may result in significant losses, and is not suitable for everyone.

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