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One of the key indicators that facilitate traders interpret candlestick charts are candlestick patterns. This can be invaluable when producing simple systems that will inform you when a trend is emerging so that you can start a trade.

The open, high, low, close rate of the stock, commodity or currency over a period of time is illustrated in the candlestick form. This period can be selected by the trader.

Day traders usually choose 5 minutes however 15 minutes may be your selection for some cases. Longer periods can be picked for longer term trades.

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The body of the candle points the difference between the open and close points. 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 market price marked up. A red (for colored charts) or black indicates the top boundary is the opening price, although the price diminished during that period.

Vertical lines poking up from top and down from the bottom are referred to as wicks. The top of the upper part of wick is the highest position that the price ever achieved during the period. The bottom of the lower wick is the low.

This style of analysis allows the trader to know at a glance if values dipped or went up during the analysis time frame. Bearish tendencies or rise in price are depicted by green or white candles while bullish temperament or fall in price would be illustrated by red or black candles.

Aside from this, the high and low compared to open and close prices are directly obvious. Then there is a solid candle minus a wick.

It’s called a Marubozu pattern. This means that the opening and closing prices were never approached in either direction by the low and high rates.

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If the shape is black or red, the opening rate was the high and the closing rate was the low. The low price is the open and the close would be the high price when the candle is green or white.

A long body indicates a fairly steady direction either downward or upward. A lengthy wick detected on either bottom or top would denote a reversal.

A candlestick has to be interpreted along with the previous ones in order to ensure precise trending. From there relatively complicated trends can be built to demonstrate the trends in the future.

Notice: Foreign Exchange trading is high-risk, can end up in substantial losses, and is not right for everybody.

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