Reading Candlestick Forex Charts

Forex charts are very important for every technical Forex trader and the perception of price helps in shaping the opinion of trends, determining the entry levels and many trading decisions. It becomes absolutely critical that what you are able to see in your trading monitor. Many times the charts are defaulted with candlestick charts but they are different from the traditional bar charts and other kind of charts. Candlestick charts are very useful in determining the important chart patterns very easily which could not be easily identified using other chart types. Therefore Forex traders need to understand how exactly they can read candles before they use in their existing trading strategies. Let us now learn how to read a candlestick Forex chart with any platform you use.

Lets explain how to read candlestick Forex charts

The experts say that there are 3 points used in the creation of candlestick charts and they are open, close and wicks. The open and close points in the candles identify where the price began and where it concluded in a selected time period in the chart. These points construct the body of the candle. If you are referring to daily Forex charts then these open and close points will tell you the daily opening price and daily closing price of the currency. The color of the candle is important and tells the direction of the market. If the color is blue then the market was trading up and if blue then the market goes down for the selected time period. Therefore for blue candle, the opening price is lower and for red it is higher.

The next thing we have is understanding the wicks of the candlestick charts. These are also referred to as the shadows of the candles. These points represent the extremes in price movement for a specific period. These wicks are quickly identifiable as they are usually thinner than the body of the candlestick. The candlestick Forex charts are thus very useful when trading as they help in understanding the momentum of the market very easily and the statistics of the price extremes.

Use of candlestick charts in trading Forex

Candlestick charts are easy to read and they just need a little practice to understand. Once you have understood the basics of candlestick charts you can open up an array of trading opportunities for you. Forex traders use the Candlestick Forex charts in gauging the market sentiments and the direction of the market. The next step after familiarizing with the reading of Forex charts, you should understand learning and identifying the candlestick patterns which can be used in conjunction with other trading tools to identify strong trends in the market. Reading candles is easy and the technical traders find these types of charts useful as a good trading tool for them.

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