Information about Candlestick Chart Patterns
One of the traders aids in developing mechanisms of candlestick charts are the candlestick patterns. They are quite important when one is engaged in the conception of basic systems that will indicate a trend formation so you can start trading.
Candlesticks have a structure that demonstrates the open, high, low and closing price of a currency, stock or commodity over a duration. You can typically mark the duration that you want to show.
5 minutes is routine for day traders but you could pick 15 minutes in some instances. For longer term trading you can pick longer periods.
The body of the candle characterizes the difference between the open and close prices. If it is white (or green/blue on a colored chart) the open is the lower boundary of the rectangular body and the price marked up 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 tumbled.
The wick is the label given to the vertical lines that customarily stick up from the top and down from the bottom of the candle body. The top of the upper segment of wick is the highest stage that the price ever attained during the period. The bottom of the lower wick is the low.
This style of analysis helps the trader to know at a glance if values slashed or went up during the analysis time frame. Bearish tendencies or rise in price are represented by green or white candles while bullish temperament or fall in price would be pointed out by red or black candles.
The relationship of open and close values to high and low values can be discerned quickly. Then there is a solid candle without a wick.
This is referred to as the Marubozu pattern. In this situation the market prices never went lower or higher than their opening and closing stands.
If the body is black or red, the opening rate was the high and the closing value was the low. If it is white or green, the opening rate was the low and the closing market price was the high.
A relatively even upward or downward trend is defined by a long body. A reversal is determined by a long wick on the top or on the bottom.
In conclusion, to ensure precise trend reading, candlestick must be read within the context of the preceding candlesticks. You then can continue to make more thorough candlestick patterns that will denote probable future trends.
