How Candlestick Charts are Used
The candlestick chart shows the open, high, low, and close price for any given time period. Each “candlestick” represents one such period, and the body of the candle is formed by the difference between the opening and closing prices. Then you have the wicks, also known as shadows above and below and they represent changes in the prices reached during that time. The candlesticks’ colour, which is usually either green or red, depicts information about the closed price and gives traders a quick visual understanding of market momentum.
In this course, you will learn how to use candlestick analysis to identify reversal patterns and how they can indicate price changes, and also when the current trend might finish. Other patterns covered are the Doji, Engulfing, and Hammer candles. You will learn what it means when a Doji appears after a strong upward trend, what an Engulfing pattern is, how analysis can help identify continuation patterns, which can indicate if a current trend is likely to continue.
There will be patterns such as Rising and Falling Three Methods and the Flags and Pennants, which are typically observed during strong trends. You will also find out what big bodies are and what upper and lower shadows mean in relation to them.
By learning how candlesticks work and how to analyze them, you will have a very powerful tool at your disposal to gauge the strength or weakness of a price move. They offer traders the ability to interpret market sentiment, identify potential reversals, and confirm continuation trends. By combining candlestick patterns with other technical indicators, you can enhance your strategies, greatly improve your risk management, and increase your chances of success in the competitive and dynamic Forex market.
