Forex for a trader
Black candlesticks forex

Black candlesticks forexBlack Candlestick Pattern In Forex. As compared to traditional bar charts, most traders find candlestick charts easy to read and visually more appealing. The trader finds it easy to interpret the relationship between the open and close as well as the high and low. Let us study the black candlestick pattern in detail. The Black Candlestick pattern represents normal selling pressure. The real body is is black with normal length, with smaller upper and lower shadows. Black Candlestick shows that prices declined from open to close during the day , with sellers controlling the trade throughout this process. Black Candlestick pattern has low reliability reflecting only one day's trading. One should use the pattern with other candlesticks for a better interpretation of a trend. Long Black Candlestick. Signaling strong selling pressure in the market, the Long Black Candlestick has a real body which black and it is relatively long. The upper and lower shadows sizes are not important.

Indicating a strong selling pressure, the long black candlestick pattern means that the close is further below the opening price. Bearish in nature, they may warn a turning point or mark a future resistance level after a long rally. If long black candlestick pattern appears after a long decline, it may signal panic or capitulation. As with other patterns, long black candlestick reflects one day's trading and must be used with other candlesticks to confirm a trend. Short Black Candlestick. The real body of the Short Black Candlestick is black and short. Implying relatively weak selling pressure with little price movement, the upper and lower shadows are smaller than the length of the real body. Offering low reliability and reflecting only one day's trading, the Short Black Candlestick pattern must be used with other candlesticks for a better confirmation of a trend. Single Candle Patterns (page 1) There are some types of single candle patterns in candlesticks' theory.

They are the following: Dragonfly Doji Gravestone Doji Hammers Hanging Man Hollow Red Candles Filled Black Candles. Doji's are reversal candlesticks that are formed when the market opens and closes at the same level. This pattern indicates there is a lot of indecision in the prices of stock. Depending on how long the shadows are and where they're located, Doji's can be divided into different formations such as Doji, long legged Doji, butterfly, gravestone and the 4 price Doji. Doji's become more significant to the market when they appear after and extended period of long bodied candles, whether they are bullish or bearish and is confirmed with an engulfing. They follow a bullish trend and only have a moderate rate of reliability. A long legged Doji candlestick forms when the stocks open and close prices remain the same. This Doji is much more powerful if it is preceded by small candles. It indicates a sudden burst of popularity in a stock that previously hasn't been very popular, thus can imply the beginning of a change in trend. Dragonfly Doji's are Doji's that opened high in the market, experienced a notable decline, but received enough support to close at the same price at which it opened. They are often seen after there has been a moderate decline and when they are confirmed with a bullish engulfing, they are indicators of a bottom reversal.

Dragonfly Doji's indicate a bullish trend that offers moderate reliability. The Dragonfly Doji has a higher reliability rate associated with it than the Hammer does. The long lower shadow is about two to three times the size of the real body. There is very little upper shadow, or none at all. The real body is at the upper end of the trading range. The color of the real body is not important. Gravestone Doji's are the opposite of the Dragonfly Doji and when confirmed with a bearish engulfing, are the top indicators for a reversal. Appropriately named, they look like gravestone's and could forecast doom for the stock. When the stock opens and closes at the same level after Forex trading, it's referred to as 4 price Doji's. This very rarely occurs and is generally only evident with securities that are thinly traded. This is a bullish trend that provides investors with moderate reliability.

Small real body at the upper end of the trading range. Upper shadow usually at least three times as long as the real body. Very little lower shadow or none at all. What is a Japanese Candlestick? While we briefly covered Japanese candlestick charting analysis in the previous forex lesson, we’ll now dig in a little and discuss them more in detail. Let’s do a quick review first. Japanese Candlestick Trading. Back in the day when Godzilla was still a cute little lizard, the Japanese created their own old school version of technical analysis to trade rice. That’s right, rice. Steve researched, studied, lived, breathed, ate candlesticks, and began to write about it. To make a long story short, without Steve Nison, candlestick charts might have remained a buried secret. Steve Nison is Mr. Candlestick. What are Japanese candlesticks? The best way to explain is by using a picture: They are used to describe the price action during the given time frame.

Japanese candlesticks are formed using the open, high, low, and close of the chosen time period. If the close is above the open, then a hollow candlestick (usually displayed as white) is drawn. If the close is below the open, then a filled candlestick (usually displayed as black) is drawn. The hollow or filled section of the candlestick is called the “real body” or body. The thin lines poking above and below the body display the highlow range and are called shadows. The top of the upper shadow is the “high”. The bottom of the lower shadow is the “low”. Basic Japanese Candlestick Patterns. Japanese candlesticks with a long upper shadow, long lower shadow and small real bodies are called spinning tops . The color of the real body is not very important. The pattern indicates the indecision between the buyers and sellers. The small real body (whether hollow or filled) shows little movement from open to close, and the shadows indicate that both buyers and sellers were fighting but nobody could gain the upper hand. Neither buyers nor sellers could gain the upper hand, and the result was a standoff.

If a spinning top forms during an uptrend, this usually means there aren’t many buyers left and a possible reversal in direction could occur. If a spinning top forms during a downtrend, this usually means there aren’t many sellers left and a possible reversal in direction could occur. Sounds like some kind of voodoo magic, huh? “I will cast the evil spell of the Marubozu on you!” Fortunately, that’s not what it means. Marubozu means there are no shadows from the bodies. Depending on whether the candlestick’s body is filled or hollow, the high and low are the same as its open or close. Check out the two types of Marubozus in the picture below. A White Marubozu contains a long white body with no shadows. The open price equals the low price and the close price equals the high price . A Black Marubozu contains a long black body with no shadows. The open equals the high and the close equals the low . This is a very bearish candle as it shows that sellers controlled the price action the entire session. It usually implies bearish continuation or bearish reversal. Doji candlesticks have the same open and close price or at least their bodies are extremely short. A doji should have a very small body that appears as a thin line. Prices move above and below the open price during the session, but close at or very near the open price. Neither buyers nor sellers were able to gain control and the result was essentially a draw.

There are FOUR special types of Doji candlesticks. The length of the upper and lower shadows can vary and the resulting forex candlestick looks like a cross, inverted cross or plus sign. The word “Doji” refers to both the singular and plural form. When a Doji forms on your chart, pay special attention to the preceding candlesticks. If a Doji forms after a series of candlesticks with long hollow bodies (like White Marubozus), the Doji signals that the buyers are becoming exhausted and weakening. In order for price to continue rising, more buyers are needed but there aren’t anymore! Sellers are licking their chops and are looking to come in and drive the price back down. If a Doji forms after a series of candlesticks with long filled bodies (like Black Marubozus), the Doji signals that sellers are becoming exhausted and weak. In order for price to continue falling, more sellers are needed but sellers are all tapped out! Buyers are foaming in the mouth for a chance to get in cheap. While the decline is sputtering due to lack of new sellers, further buying strength is required to confirm any reversal. In the next following sections, we will take a look at specific Japanese candlestick pattern and what they are telling us. Hopefully, by the end of this lesson on candlesticks, you will know how to recognize different types of forex candlestick patterns and make sound trading decisions based on them. Japanese Candlestick Patterns In Forex Trading. Japanese Candlestick Patterns. • A Brief History of Japanese Candlestick Charting Patterns.

Candlestick charts originated in Japan during the 18th century. Since no defined currency standard existed in Japan during this time rice represented a medium of exchange. Various feudal lords deposited rice in warehouses in Osaka and would then sell or trade the coupon receipts, thus rice become the first futures market. In the 1700s legendary Japanese rice trader Homma Munehisa studied all aspects of rice trading from the fundamentals to market psychology. Homma subsequently dominated the Japanese rice markets and built a huge fortune. His trading techniques and principles eventually evolved into the candlestick methodology which was then used by Japanese technical analysts when the Japanese stock market began in the 1870s. The method was picked up by famed market technician Charles Dow around 1900 and remains arguably the most popular form of technical analysis chart in use by today’s traders of financial instruments. • Why use Candlestick Charts? Candlestick charts show the same information as bar charts but in a graphical format that provides a more detailed and accurate representation of price action. Candlestick charts visually display the supply and demand situation by showing who is winning the battle between the bulls and the bears. Candlestick charts reveal another dimension of the given period’s price action by pictorially displaying the force (or lack of force) behind each price bar’s movement. Candlestick formations make all single bar and multi-bar patterns significantly easier to spot in real time, thus increasing your chances of catching high probability trade setups. In addition, because candlestick charts use the same data as bar charts (open, high, low, and close), all Western technical signals used on a bar chart can easily be applied to a candlestick chart. Candlestick charts offer everything bar charts do and more, using them is a win-win situation because you can use all the trading signals normally used on bar charts with the added clarity and additional signals generated by candlesticks.

Candlesticks charts are more fun to look at. • The Anatomy of a Candle. Candlesticks have a central portion that displays the price distance between the open and the close. This area is known as the real body or simply the body. The price distance between the open and the high for the period being analyzed is called the upper shadow, sometimes referred to as an “upper wick” as well. The highest price paid for a particular period is the marked by the high of the upper shadow. The price distance between the close and the low for the period being analyzed is called the lower shadow, sometimes referred to as a “lower wick”. The real body displays the opening and closing price of the security being traded. Closing prices have added significance because they determine the conviction of the bulls or bears. If the security closed higher than it opened, the real body is white or unfilled, with the opening price at the bottom of the real body and the closing price at the top. If the security closed lower than it opened, the real body is black, with the opening price at the top and the closing price at the bottom.

Depending on the price action for the period being analyzed a candlestick might not have a body or a wick. To better highlight or visualize price movements, modern candlestick charts (especially those displayed digitally) often replace the black or white of the candlestick real body with colors such as red (for a lower closing) and blue or green (for a higher closing). • Core Candlestick Patterns. There are multiple forms of candlestick patterns; here is a brief overview of the most popular and widely used single and multi-bar patterns commonly used today. Bullish Candle. Signals uptrend movement, they occur in different lengths; the longer the body, the more significant the price increase. Bearish Candle. Signals downtrend movement, they occur in different lengths; the longer the body, the more significant the price decrease. Long Lower Shadow. These candles provide a bullish signal, the lower shadow must be at least the size of the real body; the longer the lower shadow the more reliable the signal.

Long upper shadow These candles provide a bearish signal, the upper shadow must be at least the size of the real body; the longer the upper shadow the more reliable the signal. Hammer. The hammer is a bullish signal that occurs during a downtrend. The lower shadow should be at least twice the length of the real-body. Hammers have little or no upper shadow. When a hammer occurs during an uptrend it is known as a “hanging man” and is a bearish signal. Because of the bullish long lower shadow however, this pattern needs bearish confirmation by a close under the hanging man’s real body. Shooting Star. This candle has a long upper shadow with little, or no lower shadow, and a small real body near the lows of the session that develops during or after and uptrend.

Harami. The Harami is a two-candlestick pattern in which a small real body forms within the prior session’s larger real body. Doji. The Doji is a candlestick in which the session’s open and close are the same, or almost the same. There are a few different varieties of Dojis, depending on where the opening and closing are in relation to the bar’s range. Dragonfly doji. The Dragonfly Doji has a long lower shadow, the open, high, and close are at or very near the session’s high. This pattern often signals reversal of downtrend. Gravestone doji. The Gravestone Doji has a long upper shadow, the open, low, and close are at or very near the session’s low. This pattern often signals reversal of an uptrend.

High wave candle long-legged doji. This candle has a very long upper or lower shadow and a small real body. If the opening and closing price are the same the candle has no real body and is then called a Long-Legged Doji. The first picture is a high wave candle the second is a Long-Legged Doji. Engulfing candles. The bullish engulfing pattern consists of large white real body that engulfs a small black real body in a downtrend. The bearish engulfing pattern occurs when the bears overwhelm the bulls and is reflected by a long black real body engulfing a small white real body in an uptrend. Spinning tops. Spinning tops are simply candles with small real bodies. • How Candlestick patterns translate into Nial Fuller’s Price Action Setups. My favorite price action setups consist of the pin bar, the inside bar, and my proprietary fakey setup. The above candlestick patterns can easily be condensed down to one of my three price action setups or may be applicable to more than one of my price action setups. It can be difficult to keep track of the various forms of candlestick patterns. This is why I feel like my three main price action setups do a great comprehensive job of including all the relative candlestick patterns and make them easier to understand in the context of daily price action.

Let’s take a look at some charts with examples of some of the various candlestick patterns converted into my price action setups. Pin Bars. The pin bar can include the following previously described candlestick patterns; long lower shadow candles and long upper shadow candles, hammers and shooting stars, dragonfly and gravestone dojis. Inside Bars. Inside bars can technically encompass any candlestick pattern because they are simply a series of at least two candlesticks where the first candlestick completely engulfs the entire range of the subsequent candlestick, however, more often than not inside bars end up being spinning tops or dojis. Note, the inside bar is different from the “engulfing pattern” because it includes the entire range of the bar, from high to low, where as the engulfing pattern only includes engulfment of the real body of the candle. I generally trade inside bars in the context of a strongly trending market as they are often great entry points into trends. However, often times inside bars will occur at major market turning points as well as the previous trend loses momentum, pauses and forms an inside bar, and then changes direction. The Fakey Setup My fakey setup is essentially a multi-bar pattern that consists of a false break from an inside bar pattern or a key level.

The fakey can consist of a number of different candlestick patterns. Often times the fakey setup will consist of a bullish or bearish engulfing pattern which is completely engulfing the range of a spinning top or doji candle which gives rise to a false break bar that can take the form of any of the candlesticks above that qualify as pin bars. In Conclusion. Candlestick charts offer a more vivid depiction of price action than what a standard bar chart can provide. Candlestick patterns in and of themselves are useful, however there are many different names and interpretations of candlestick patterns which often can induce confusion and can be hard to keep track of. You will find that my price action educational material condenses all of the important candlestick patterns into 3 simple yet highly effective price action setups. I feel that my take on candlestick patterns expressed via my proprietary ideas on price action trading is a much more efficient, simple, and profitable way to trade candlesticks and I think after studying my forex trading course you will feel the same way. 21 easy Candlestick patterns ( and what they mean ) Candlestick patterns – 21 easy patterns. learning just a few key candlestick patterns WILL improve your ability to recognize trading opportunities. and, enter better trades! The Japanese have been using these patterns for centuries, to trade rice of all things! so, there is a rich history to the art of candlestick trading. candlestick patterns are an integral part of technical analysis , Candlestick patterns emerge because human actions and reactions are patterned and constantly replicate and are captured in the formation of the candles. by recognising these patterns and applying the the lessons that the patterns teach, can and does yield results in your trading!

CANDLESTICK PATTERNS TRADING STRATEGIES. And isn’t that the aim of trading? Now I know what your thinking! e. DON’T SHOW ME ANOTHER ‘ESSENTIAL’ LIST THAT I GOTTA MEMORIZE! Don’t think of this as a list to memorize. Think of this as a guide that you jump in and out of , whenever you need to jog your memory! For the most part Candlestick patterns are about spotting market turns , If you can spot a turn, then you can profit from it. The value of candlestick patterns to spot trading opportunities is a thorny topic among the trading community, but there have been statistical studies on the accuracy of technical analysis and the results are pretty convincing. I have broken down the patterns into 3 categories: Equal open and close candles. ( known as doji candles ) Short body candles. Long body candles.

Within these categories are both bullish reversal and bearish reversal patterns . When you think you see a familiar candlestick pattern in your charts, You can double check the pattern in this guide and make an informed choice on what to do next. Equal open and close, Doji patterns. The basic doji candlestick pattern is when a candle’s open and close are almost equal. The shadows can vary in length. So the candlestick looks like an inverted cross, a simple cross, or plus sign. The doji conveys an even struggle between the forces of the market, both side pushing with no net gain is achieved. The doji can be both a reversal pattern and a continuation pattern. Abandoned Baby: Reversal pattern. This candlestick pattern looks like it sounds, the parents have walked off and left the baby behind! This is a reversal pattern which can occur at the end of a run in prices. It is pretty rare to find, but it is pretty reliable when it does happen. It happens over three candles, the middle candle is a doji which has gapped away from the previous candle. The final candle gaps back the opposite direction. The gaps leave a clear distance between the shadow of the doji candle and both shadows of the first and third candle, leaving it abandoned.

This is another turning point candlestick pattern which most accurate on a daily chart. Occurring at both a bullish and bearish reversals, it consists of two candles the first candle brings the market to the high or low. The next candle is a doji which lies inside the range of the real body of the previous candle. The dragonfly normally appears at reversals. The open and close of the candle are at or near the high of the day. The shadow can vary in length, but is usually quite long. The Dragonfly doji is quite a powerful reversal indicator and does point to large moves ahead. This is another three candlestick pattern . It is normally associated with a bullish reversal. The first candle is a clear downtrend with a long body. The next day opens lower but trades in a very narrow price range. The last day reverses prices higher and should close at or above the midpoint of the first.

This candlestick pattern is the opposite of the morning star. Again, a three day pattern and is associated with a bearish reversal. The first candle is an uptrend with a long body. The next day opens higher but trades in a very narrow price range. And the last day reverses lower and should close at or below the midpoint of the first candle. Also known as the reverse dragonfly, simply because it is flipped over! The candlestick pattern shadow can be any length but the open and close are at or near the low of the day. It can be a bearish reversal pattern, but is more often found within the downtrend, signalling that the downtrend is set to continue. Long shadows are on of the more reliable candlestick patterns. Candles with a long top shadow and short lower shadow show us that buyers dominate the market, these can lead to or continue a bull run in prices. On the other end. Candles with a long lower shadow and short upper shadow show us that sellers dominate the market and these candles can lead to or continue a bear run in prices. Similar to the doji version, except the middle candle has a short body. It is a three day pattern and is associated with a bearish reversal. The first candle is an uptrend with a long body.

The next day opens higher but trades with a short real body. And the last day reverses lower and should close at or below the midpoint of the first candle. Again, this pattern is similar to the doji version except the middle candle has a short body. A three day pattern and is associated with a bullish reversal. The first candle is an downtrend with a long body. The next day opens lower but trades with a short real body. And the last day reverses higher and should close at or above the midpoint of the first candle. This candle is one of those dual meaning candlestick patterns. It can be a bullish reversal pattern, happening near the low of a trend.

But it can also occur during the downtrend. The hammer candle forms when a the price moves lower after the open, and then rallies to close significantly higher than the low. The candlestick ends up looking like a like a square hammer with a long handle. The hammer candle happens at the start or during a decline. This is a bullish reversal pattern. The inverted hammer candle forms when a the price moves higher after the open, it then declines to close significantly lower than the low. Again, these candlestick patterns end up looking like a like a hammer with a long handle. The hammer candle happens at the end of a decline. This candle is an indication of a market ready to rally! Showing a bullish impulse. It forms when the price drops after opening to form a long shadow, then price rallies to close at the highs of the candle. The real body of the candle forms the head, and the long shadow forms the guy’s ‘hanging legs’! Nobody knows how a spinning top will fall once it stops spinning! And as such the spinning top candle indicates indecision in the market. After the candle closes the market will tend to move away from the spinning top quite rapidly.

So it is part of the trend following group of candlestick patterns. The candle forms with a short real body and an equal upper and lower shadow. This is one of the particularly reliable bearish candlestick patterns. It is signalling that a top is in place and a trader should close any long positions or get ready to short the market. The market gaps higher on opening, and then rallies to a high. Prices will then decline to close only slightly above the open. The form of the candle looks as if a star is shooting down towards the ground. Upside Gap with Two Crows: This is a bearish pattern that happens over 3 daily candles. The first candle is a long green candle, the second candle happens with an upward gap open with a small real body. The final candle is a long red candle which engulfs the second candle, but the close of the day remains above the open of the first day. This one is technically part of the family of bearish candlestick patterns, but, it usually indicates a corrective reversal within an uptrend, therefore it is hard to trade but can be used more as an indication the the trend is set to continue.

Long body candlestick patterns. Dark cloud cover candlestick patterns indicate an incoming bearish reversal. A two candle pattern, the first candle is a long green bullish candle. The next candle opens higher but reverses and declines, the candle then closes below the center of the first candle. This is on of the strong reversal candlestick patterns. There is both a bearish and bullish engulfing pattern. The bearish engulfing candle happens at the end of an uptrend, and the bullish at the end of the downtrend. The first candle has a small real body, the reversal candle is long, ideally with short shadows, the real body of the second candle fully engulfs the first candle. The strength of the reversal can be gauged based on how many of the previous candles that the engulfing candle swallows up! The more ‘swallowed candles’, the more powerful the following reversal move will tend to be. This is another of the two candle bullish reversal candlestick patterns. The first candle is long and red bringing the market lower. The next candle opens at new lows but rallies to close at a point which ‘pierces through the centreline of the previous candle.

Candlestick Sandwich: The candlestick sandwich is also a bullish reversal pattern over three days action. The pattern forms with two red candles surrounding one green candle in the middle, creating a sandwich! The closing prices of both red candles must be very close, this action creates a support base to trade off. Three green Soldiers: This candlestick pattern creates a stairway for higher prices. It is a bullish reversal pattern formed with three candles. The three candles are green, each consecutive candle opens within the real body of the previous candle. The close of each day brings the market to new highs, signalling an uptrend is about to take off. Look, you reached the end! Like I said at the start, use this article as a ‘go to guide’ when you see some candlestick pattern price action that could be forming a reversal in the market you trade! This guide should be a help in spotting those candle patterns as they form and, and then you can trade on what the pattern suggests will happen next. If you liked reading about candlestick patterns and want to learn more about technical analysis, why not check out our guide to day trading strategies! If you liked this article, give it a share! Good luck in your trading!

Warning! This E-Book improve your trading dramatically. 9 Powerful Forex Trading Strategies. 42 pages E-Book teaching you the most successful Trading Strategies. Strategies include Momentum and Role Reversal, Heikin-Ashi, RSI and Moving Average Crossover, Candlesticks and more. This E-Book contains step-by-step instructions, examples to teach you how to trade profitably. Chart Basics (Candlesticks) 2.1 Level 1 Forex Intro 2.2 Level 2 Markets 2.3 Level 3 Trading. 5.1 Short Term 5.2 Medium Term 5.3 Long Term. Now that you have some experience and understanding in currency trading, we will starting discussing a few basic tools that forex traders frequently use. Due to the fast paced nature and leverage available in forex trading, many forex traders do not hold positions for very long. For example, forex day traders may initiate a large number of trades in a single day, and may not hold them any longer than a few minutes each.

When dealing with such small time horizons, viewing a chart and using technical analysis are efficient tools, because a chart and associated patterns can indicate a wealth of information in a small amount of time. In this section, we will discuss the "candlestick chart" and the importance of identifying trends. In the next lesson, we'll get into a common chart pattern called the "head and shoulders." (Day trading could be your cup of tea; you might want to read How To Set A Forex Trading Schedule .) While everyone is used to seeing the conventional line charts found in everyday life, the candlestick chart is a chart variant that has been used for around 300 years and discloses more information than your conventional line chart. The candlestick is a thin vertical line showing the period's trading range. A wide bar on the vertical line illustrates the difference between the open and close. The daily candlestick line contains the currency's value at open, high, low and close of a specific day. The candlestick has a wide part, which is called the "real body". This real body represents the range between the open and close of that day's trading. When the real body is filled in or black, it means the close was lower than the open. If the real body is empty, it means the opposite: the close was higher than the open.

Just above and below the real body are the "shadows." Chartists have always thought of these as the wicks of the candle, and it is the shadows that show the high and low prices of that day's trading. When the upper shadow (the top wick) on a down day is short, the open that day was closer to the high of the day. And a short upper shadow on an up day dictates that the close was near the high. The relationship between the day's open, high, low and close determine the look of the daily candlestick. The chart above is an example of a one-month candlestick chart of the popular EURUSD pair. Forex traders will analyze these charts closely to identify changes in momentum and After studying this type of chart, it becomes apparent that there is a wealth of information displayed on each candlestick. At just a glance, you can see where a currency's opening and closing rates, its high and low, and also whether it closed higher than it opened. When you see a series of candlesticks, you are able to see another important concept of charting: the trend. (For a more in depth analysis, check out The Art of Candlestick Charting .

) What is a 'Red Candlestick' A red candlestick represents a downward price movement where the close is lower than both the open and prior close. The candlestick is composed of the period's high and low, represented by the shadows, and the open and close, represented by the real body. Bullish Engulfing Pattern. BREAKING DOWN 'Red Candlestick' Charts are an integral part of technical analysis. Many technical analysts prefer candlestick charts since they convey a lot of information at a glance. For example, a red candlestick quickly conveys that the price moved lower during the period, as well as the open, high, low, and close. The longer the candle, the greater the price movement over the period. Most charting software will allow you to change the colors of candlesticks, but the three most commonly used colors are black filled, red filled, red hollow, and black hollow. Each color conveys a different meaning: Black Filled Candlesticks occur when the close is greater than the prior close but lower than the open. Black Hollow Candlesticks occur when the close is greater than the prior close and the open. Red Filled Candlesticks occur when the open and prior close are lower than the close.

Red Hollow Candlesticks occur when the close is greater than the open but lower than the prior close. The two most common types of candlesticks are black hollow candlesticks, which are indicative of a strong uptrend, and red filled candlesticks, which are indicative of a strong downtrend. Red hollow and black filled candlesticks are less common since they are typically indicative of an upcoming reversal rather than a continuation of an existing trend. By knowing these differences, technical analysts can quickly glean a lot of information from the color of a candlestick before looking at any aspects of the chart. For example, a black filled candlestick might suggest that the price is becoming top-heavy, while a red filled candlestick represents a clear and strong downtrend. Traders may use these insights to gauge market sentiment at a glance. Most traders use candlestick charts in conjunction with other forms of technical analysis to maximize their risk-adjusted returns. For example, they may gauge market sentiment using candlestick charts and then use chart patterns to identify potential areas of breakdowns or breakouts. Technical indicators can also be useful as a confirmation of market sentiment. For example, the relative strength index (RSI) may be used in conjunction with candlestick charts to show how strong a trend is in a given direction. Japanese Candlesticks.

Over the last few decades, traders have begun to use candlestick charts far more frequently than any other technical analysis tool. Candlestick charts have a simple, easy-to-analyze appearance, and, provide more detailed information about the market at a glance than bar or line charts. The Benefits of Candlestick Charts. Candlestick charts are one of the most common tools traders use for technical analysis. Most traders prefer to use the candlestick chart because it can help them to: Determine the current state of the market at a glance. Just by looking at the color and length of a candlestick, traders can determine instantly if the market is strengthening (becoming bullish) or weakening (becoming bearish). See the direction of the market more easily. On a candlestick chart, the color and shape of the candlestick can help traders determine if an uptrend is part of bullish momentum or simply a bearish spike. Identify market patterns quickly. Candlestick charts display specific bullish and bearish reversal patterns that cannot be seen on other charts. Flame on: Candlestick Features.

When you open a candlestick chart, you may notice that it looks similar to a bar chart. Like the bars in a bar chart above, each candlestick on the candlestick chart shows the range of a currency in a vertical line and is defined by four price points: high, low, open and close. Open Close High Low. Anatomy of a Candlestick. Each candlestick is made up of a body and two shadows. Open Close High Low Real body Upper Shadow (aka the wick) What Do Colored Candlesticks Mean? – Technical Chart Analysis. What do colored candlesticks mean on trading charts? We basically use two different colors to distinguish candles that are bearish from candles that are bullish. In other words, we can see whether prices went up or went down between the start and ending of a specific period of time. Traditional forex traders (mostly geeky guys) use white candles to show that the market opened at a lower price than the close price in a specific time period (bullish candle.) They use black to show the opposite, that in a specific time-period, the prices generally went down (bearish candle.) What Do Colored Candlesticks Mean? But since we are smart, pretty and creative ladies, we can color our candles with any two delightful colors that our hearts desire. On your demo forex trading platform, just look for the candlestick settings and change the colors. If you can’t find it, simply contact your broker’s support team for help.

Today, I’m thinking pink for bullish candles and purple for bearish. What Do Colored Candlesticks Mean – Red & Blue. Just by taking a glance at the pink candle, we immediately know that in the specific period of time during which this candle was completed, prices generally went up. The opposite is revealed by the purple candle. One quick point is that forex traders usually use a lighter color for bullish candles and a darker color for bearish. Green and red are the colors most commonly used by stock traders, because in stock trading the positive price movements happen only when the prices go up (bullish), so they use green (the winner’s color) for these candles. Become the master of trading! Get Invest Diva’s books NOW! When the stock markets go down, most people lose money, so stock traders use the red color for bearish candles. But as we said before, in the forex market, bears and bulls can both be winners depending on their position in the market, so we can use whatever colors we feel like! But it is better to be consistent with our personalized candlestick colors so that our eyes get used to them and we don’t get confused. Here are some other candle color possibilities. What Do Colored Candlesticks Mean – Green & Purple. The Meaning of Candles Colored in Green and Purple: Green is bullish and purple is bearish. What do colored candlesticks mean? – Pink & purple. The pink candle represents a bullish market sentiment.

The purple candle represents a bearish market sentiment.



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