Information about Candlestick Chart Patterns

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One of the traders accessories in developing formulas of candlestick charts are the candlestick patterns. They are quite important when one is engaged in the creation of basic systems that will indicate a trend formation so you can commence trading.

The form of the candlesticks refer to the high, low, open and closing price of stocks, currencies or commodities during a particular period. This period can be chosen by the trader.

5 minutes is probable for day traders but you might select 15 minutes in some situations. For longer term trading you can choose longer periods.

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The body of the candle characterizes the difference between the open and close values. If it is white (or green/blue on a colored chart) the open is the lower boundary of the elongated body and the price advanced during the period you are studying. Should it be black or red in charts with color, the top extent indicates the opening value and during that period, the price descended down.

Vertical lines sticking up from top and down from the bottom are called wicks. The highest rate ever obtained during the period is the top of the upper wick section. Contrarily, the lowest value is the bottom of the lower wick part.

This style of analysis helps the trader to know at a glance if values dipped or shot up during the analysis time frame. A white or green candle reveals a rising price or bearish tendency and a black or red candle symbolizes a dropping price or bullish tendency.

The connection of open and close values to high and low values can be discerned spontaneously. Then you may have an entirely definite candle without a wick.

The name for this is Marubozu pattern. This illustrates that the opening and closing prices were never moved in either direction by the low and high rates.

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he high value as opening price and low value as closing price is represented by the red or black candle. Adversely, green or white candle indicates the low was the opening price while the high was the closing price.

A long body indicates a fairly steady movement either downward or upward. A lengthened wick either top or bottom signifies a reversal.

A candlestick has to be read along with the previous ones in order to ensure accurate trending. You then can advance to make more thorough candlestick patterns that will denote probable future trends.

Note: Forex trading is risky, can end up in material losses, and is not suitable for everyone.