Candlesticks were introduced by Japanese rice traders and they used them long time back for the purpose of analyzing the rice markets. Now a lot of traders are using these candlestick techniques for analyzing forex markets and stock markets.
If you are using metatrader for forex trading the following is how a candlestick chart appears. You can set the properties of the metatrader to change the colors for the candlestick chart. I am using a white background and red color for bearish candlesticks and Limegreen color for bullish candlesticks.
Metatrader Candlesticks Chart
Candlestick charts primarily contain the main body and wicks or shadows. The following is the picture of bullish and bearish candlesticks. If the close price is above the open price it is called a bullish candlestick. If the close price is below the open price it is called bearish candlestick. The extensions above each candlestick are called upper shadows/wicks. The extensions below each candlestick are called lower shadows/wicks. Each candlestick represents a period of data. If you open the hourly chart, each candlestick represents the currency price movements in that hour. The extensions represent the extreme low price or extreme high price in that particular time frame. Metatrader provides different time frame charts like one minute, 5 minutes, 30 minutes, hourly, four hour, daily, weekly and monthly charts.
Bullish and Bearish Candlesticks
Traders use candlesticks to check different patterns which can be either reversal patterns or continuous patterns. There are many reversal or continuation patterns that traders use. Many traders use them in combination with other technical indicators like Commodity Channel Index, Stochastics Indicator, Bollinger Bands etc to find out the price movements correctly.
In the coming articles we will discuss many candlestick patterns and how to use them with different indicators to find out the price movements.
The following is a small video from you tube on how to read the Japanese candlesticks. check it.
[...] by professional traders and the most profitable price pattern ever found: The Divergence Pattern.Trade Forex 1 Minute Dailyon technical indicators and they don't realize how valuable the original candlesticks are. The [...]