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One of the traders helpers in developing methods of candlestick charts are the candlestick patterns. They are quite indispensable when one is engaged in the conception of basic systems that will indicate a trend formation so you can commence trading.

Candlesticks have a formation that displays the open, high, low and closing price of a currency, stock or commodity over a duration. This period can be selected by the trader.

Day traders generally choose 5 minutes however 15 minutes could be your option for certain cases. For longer duration trading you can opt for longer periods.

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The candle body defines the disparity of the close and open points. If it’s green/blue (for colored charts) or white then the lower boundaries of the rectangular body is the open and price went up during the consideration period. If it is black (or red on a colored chart then the opening price is the top boundary and the price tumbled.

The wick is the title given to the vertical lines that customarily stick up from the top and down from the bottom of the candle body. The highest price ever accomplished during the period is the top of the upper wick section. Contrastingly, the lowest value is the bottom of the lower wick area.

The blessing of this form of analysis is that the trader can straight off see whether prices rose or fell over the period. Bear markets are represented by green or white candles whilst bull markets are represented by red or black candles.

Aside from this, the high and low compared to open and close prices are directly obvious. Then you may have an evidently solid candle without a wick.

This is named as the Marubozu pattern. Prices never went higher or lower than the opening and closing prices in this case.

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he high value as opening price and low value as closing price is marked by the red or black candle. Adversely, green or white candle indicates the low was the opening price while the high was the closing price.

A long body indicates a fairly steady direction either downward or upward. A reversal is designated by a long wick on the top or on the bottom.

A candlestick has to be read along with the previous ones in order to ensure accurate trending. From there relatively elaborate trends can be built to delineate the trends in the future.

Disclaimer: Currency investing is not risk free, can result in significant losses, and is not right for everyone.

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