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One of the vital indicators that aid traders interpret candlestick charts are candlestick patterns. Candlestick patterns are helpful for making easy systems that will advise you regarding the evolution of a trend in order for you to begin trading.

Candlesticks have a formation that displays the open, high, low and closing price of a currency, stock or commodity over a time frame. The period covered is typically user selectable.

Day traders typically choose 5 minutes although 15 minutes can be your option for certain cases. For longer period trading you can pick longer periods.

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The body of the candle characterizes the difference between the open and close prices. If it’s green/blue (for colored charts) or white then the lower bounds of the rectangular body is the open and price went higher 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 pointing up from the top and down from the bottom are called wicks. he highest stage the price ever hit is the top of the upper wick area. The low is the bottom of the lower wick.

The trader can decide directly 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 recognized by red or black candles.

Aside from this, the high and low compared to open and close prices are rapidly obvious. You could have a candle that is absolutely solid, sans the wick.

It’s called a Marubozu pattern. In this situation the rates never went lower or higher than their opening and closing stance.

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The opening was the high price & the closing was the lower price if the candle was red or black. The low price is the open and the close is the high price when the candle is green or white.

A longish body means a relatively steady movement either up or down. A lengthy wick detected on either bottom or top would signify a reversal.

For accurate trend identification a candlestick must be considered in conjunction with the others that preceded it. You then can advance to make more detailed candlestick patterns that will signify probable future trends.

Disclaimer: Foreign Exchange trading is risky, may result in considerable losses, and is not suited for everyone.

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