Reading Candlestick Chart Patterns
Nov 20, 2009 currency trading
One of the key indicators that aid traders understand candlestick charts are candlestick patterns. Candlestick patterns are valuable for making effortless systems that will advise you regarding the compilation of a trend in order for you to begin trading.
The open, high, low, close rate of the stock, commodity or currency over a period of time is presented in the candlestick form. The period covered is generally user selectable.
5 minutes is universal for day traders but you may opt for 15 minutes in some situations. For longer period trading you can pick longer periods.
The difference between open and close points are marked by the candle body. If it?s a white or blue / green on charts with color, the lower body is the open and while you were considering it, the value advanced. Should it be black or red in charts with color, the top extent indicates the opening rate and during that period, the price tumbled down.
In candles, vertical lines pointing up from the top and down from the bottom are known as 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 component.
The trader can establish immediately the price behavior from this analytical method. Bear markets are illustrated by green or white candles whereas bull markets are represented by red or black candles.
The connection of open and close values to high and low values can be noted immediately. Then there is a solid candle minus a wick.
The name for this is Marubozu pattern. This illustrates that the opening and closing prices were never reached in either direction by the low and high market values.
The high value as opening price and low value as closing price is designated by the red or black candle. On the other hand, green or white candle means 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 elongated wick either top or bottom signifies a reversal.
For accurate trend index a candlestick must be considered in conjunction with the others that preceded it. Then you can devise more complex candlestick patterns indicating the plausible trends to come.
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