Principles of Candlestick Chart Patterns
March 2, 2010
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One of the important indicators that aid traders interpret candlestick charts are candlestick patterns. Candlestick patterns are instrumental for making uncomplicated systems that will advise you regarding the evolution of a trend in order for you to begin 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 mostly choose the stretch of time that you want to show.
The ecommended time period is 5 minutes but you may favor in particular situations to take 15 minutes. For longer period trading you can choose longer periods.
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The candle body indicates the difference of the close and open points. 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 examining. If it is black (or red on a colored chart then the opening price is the top boundary and the price went down.
Vertical lines sticking up from top and down from the bottom are called wicks. he highest position the price ever hit is the top of the upper wick portion. The low is the bottom of the lower wick.
The trader can conclude spontaneously 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 illustrated by red or black candles.
You can also behold at a glance how the highs and lows apply with the opening and closing rates. You could have a candle that is absolutely solid, minus the wick.
This is referred to as the Marubozu pattern. Prices never went more or lower than the opening and closing prices in this situation.
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If the body is black or red, the opening market price was the high and the closing value was the low. On the other hand, green or white candle indicates the low was the opening price while the high was the closing price.
A relatively uniform upward or downward trend is signified by a long body. A lengthy wick situated on either bottom or top would signify a reversal.
For accurate trend identification a candlestick needs to be examined in conjunction with the others that preceded it. From there relatively elaborate trends can be actualized to exemplify the trends in the future.
Notice: Currency investing is high-risk, may end up in material losses, and is not suitable for every person.