RSS FeedOne of the traders aids in developing methods of candlestick charts are the candlestick patterns. They are quite important when one is engaged in the setting up of basic systems that help indicate a trend formation so you can commence trading.
Candlesticks have a formation that demonstrates the open, high, low and closing price of a currency, stock or commodity over a time frame. You can typically choose the stretch of time that you want to show.
5 minutes is routine for day traders but you could opt for 15 minutes in some instances. For longer duration trading you can pick longer periods.
The difference between open and close points are represented 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 border indicates the opening market price and during that period, the price descended down.
Vertical lines pointing up from top and down from the bottom are called wicks. The highest position the price ever hit is the top of the upper wick division. The low is the bottom of the lower wick.
The boon of this form of analysis is that the trader can straight off see whether prices rose or fell over the period. A white or green candle exposes a rising price or bearish tendency and a black or red candle illustrates a crumbling price or bullish tendency.
You can also inspect at a glance how the highs and lows apply with the opening and closing values. You might have a candle that is extensively solid, minus the 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 rates.
If the shape is black or red, the opening market price was the high and the closing rate was the low. If it is white or green, the opening value was the low and the closing rate was the high.
A relatively uniform upward or downward trend is indicated by a long body. A reversal is designated by a long wick on the top or on the bottom.
In short, to ensure exact trend reading, candlestick must be read within the context of the preceding candlesticks. You then can continue to make more intricate candlestick patterns that will signify probable future trends.
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