Candlesticks were invented by Japanese rice dealers in the 17th century and are still utilized by securities traders today. Candlesticks on a price chart provide a quick snapshot of a security’s price behavior over several periods. Forex traders can use a candlestick chart to choose the optimal trading strategy. The first step in using Japanese candlesticks in your Forex trading is to unlock the information.
Recognize the various components that make up a candlestick.
The long rectangular box is the candle body, often known as the natural body. The opening price is shown at the bottom of the body, while the closing price is shown at the top. A thin line that lies from the top or bottom of the trend may be visible. The shadow is a line that extends from the top of the body. The shadow represents the period’s highest trading price. The tail is a line that extends from the bottom of the body. The seat denotes the period’s lowest trading price.
Choose a time frame to work with.
Candles depict the price changes of currency pairs across a range of time frames, from one minute to several months. Examine the various colors and lengths of each candle. When the price of a currency pair rises, the candle body turns white or green. When the price of a currency pair falls, the candle body turns red or black. The length of the body indicates the price movement’s strength.
Understanding Length
Understand that a lengthy white or green candle body on the EUR/USD (Eurodollar/US dollar) is a bullish indication. A bearish signal is a long red or black candle body. The candle body is short when prices fluctuate in a limited range. Click here for more details! Brokers with zar account
Examine the graph to see if there is a pattern.
A series of long white or green candles going upwards suggests that a currency pair, such as the EUR/USD, is in a strong bullish trend. A cluster of small squat green or white candles with lengthy tails at the top suggests a faltering bull trend that may reverse.
A string of extended red or black candles heading downwards shows that the EUR/USD is in a strong bearish trend. A cluster of small black or red candles with vast shadows at the bottom suggests that the bear trend is fading and maybe about to reverse.
To help you decide on your trading approach, look at the candlestick chart.
For example, on the EUR/USD thirty-minute chart, there are three lengthy white or green candles in an uptrend. A new long candle is beginning to form. You can buy the currency pair as durable as the candlesticks reflect the uptrend.
Conclusion
Forex candlesticks and what they mean should be familiar to all currency traders. When traders learn to study forex candlesticks, they typically discover that they can recognize a wide range of price activity considerably more quickly than when utilizing other charts. The extra benefit of forex candlestick analysis is that it uses the same method for all financial markets’ candlestick charts.
