The Simple Way to Read Candlestick Charts
The wonderful thing about candlesticks is that you can see the direction of price movements at a glance. Not only do you see whether the candle as a whole is above or below the prior one, but you may also tell by the colors whether it marked a reversal or a continuation of the trend. Certain patterns are especially critical in learning to read candlestick charts. In that case you don’t have a wick in one or both directions.
In another case, the opening and closing prices may have been the same. This is referred to as a Doji pattern. If the body of the candle is long with short or non existent wicks, close to Marubozu, this indicates a reasonably steady movement, possibly part of a trend. Trend based trading will have a tendency to be suspicious of Doji patterns, that might be suggestive the market is starting to become unreliable. Of course one candlestick on it’s own is not enough to form the root of a trading call. You will always look at a series of candles. For example, you can draw trend lines along the highest highs and lowest lows on candlestick charts. These will help you to spot whether a trend is forming, or if the lines are converging, whether a breakout might be expected.
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