What Candlestick Means For Forex Traders https://www.brokerxplorer.

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W h a t C a n d l e s t i c k M e a n s F o r F o r e x Tr a d e r s
HHOOM
MEE // AARRTTIICCLLEE // TTEECCHHNNIICCAALL AANNAALLYYSSIISS

BByy SSiillvvaannaa LLeeee

 Dec 10 2014     

Candlestick is a type of chart that usually available in all trading platforms. But it is also an extremely useful indicator as well.

There are many indicators in forex trading, but there are only a handful that is as commonly used as candlestick. Maybe you wonder, why
candlestick? it is not an indicator, it is just a type of chart. Yes, that is true enough. Candlestick is a type of chart that usually available in all
trading platforms. But it is also an extremely useful indicator as well.

C a n d l e s t i c k : Fa c t u a l A n d I n f o r m a t i v e
This is the one type of chart that I think every traders ought to understand. Understanding candlestick will be extremely helpful for trader
to understand price movement on the chart. Furthermore, even if a trader said that he is trading without chart (naked trading), he usually
is still relying on candlestick. Candlestick o�ers similar information to that of bar charts, but with relatively more attractive display and
in�nitely more informative.

Candlestick is also the easiest chart to be interpreted, because each candle already supplies information about the strength of buy and
sell, as well as its open and closed prices. So let's see the structure of the following candlestick.

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Candlestick Structure

Candlestick is established on data of high, low, and close prices. If in a certain time frame, cclloossee pprriiccee iiss aabboovvee ooppeenn pprriiccee,, tthheenn
ttrraannssppaarreenntt oorr w
whhiittee ccaannddlleessttiicckk w
wiillll bbee ffoorrm
meedd. While if cclloossee pprriiccee iiss uunnddeerr ooppeenn pprriiccee,, tthheenn bbllaacckk ccaannddlleessttiicckk w
wiillll bbee
ffoorrm
meedd. The white or black part of a candlestick is being called as the body, and the vertical lines over or under it depicts high/low ranges
and is called shadow.

Upper shadow represents the highest price at a time (high), and the lower shadow represents the lowest price at a atime (low).
Consequently, from a single candlestick we can extract informations about the value of high-low-closed- prices, the strength of buy/sell,
and transaction volumes in a certain time frame; hereinafter learning the disposition of the ongoing trend.

Candlestick Chart

The black and white candles body could be either long or short. The longer the candlestick body, the stronger the buy/sell that has
occured. See screenshot above; white-bodied candlestick shows that prices was closed at higher value than at opening, indicating an
uptrend. And vice-versa.

C a n d l e s t i c k : Va l u a b l e I n d i c a t o r
But that is not the only informations that can be gleaned from candlestick. There are many kinds of candlestick and candlestick patterns
that indicate di�erent propensity on chart movements. Here is some that every trader need to know.

SSppiinnnniinngg TTooppss

If spinning top appear, then it means that at the time, there are not many buyers and sellers in the market. It signals the coming of
rreevveerrssaall or the time when trend move to the opposite direction of its coming, at least for some time.

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M
Maarruubboozzuu

If Marubozu appear on the chart, it means buyers (on white candles) or sellers (on black candles) are very dominant, so the ongoing trend
(uptrend on whites, downtrend on blacks) is particularly ssttrroonngg.

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D
Doojjii

Doji is created due to the balance between buyers and sellers. The short body means that from opening to closing, prices remain
unchanged. Consequently, the candle looks like a plus sign, or a cross, or inverted cross. Singularly, it is actually a nneeuuttrraall signal;
therefore, upcoming movement is based on the previous candles and con�rmation by future candles.

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The candlestick that was founded in Japan during 17th century now is widely used in worldwide �nancial market due to its information-
laden nature. There are many more variations of candlestick apart from those three. Based on the positioning, there are Harami,
Hammer, Hanging Man, Star, etc.  Through candlestick, we can predict the tendencies of upcoming price movement simply by studying
the chart and notice the trends related to the emerging candles.

SSiillvvaannaa LLeeee
Trading forex since 2010, I switch from day trading to swing trading 5 years into my journey as a trader due to the changing
of market dynamics. I believe that being able to always adapt to the current trend is an important skill to withstand the
market.

Tell us what you want to �nd 

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Disclaimer
Forex is a high-risk trading instrument which is not suited for all traders and investors.
Before deciding to trade Forex or any other �nancial instrument, you should carefully consider your investment objectives, level of
experience, and risk appetite.
Even if we try to o�er the most up-to-date data, we can't completely ensure the accuracy and validity of the materials.

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