Basics Of Candlesticks (Part 1)
A candlestick is composed of a body and wicks (thin lines extending above and below the body). A candlestick chart represents the price movement of a pair over a certain period of time.
A GREEN candlestick is formed if the close is above the open
A RED candlestick is formed if the close is below the open
The space between the open and close points is depicted as the BODY
The thin lines that extend from the top and the bottom are called as WICKS or Shadows
The top of the upper wick represents the HIGH
The bottom of the lower wick represents the LOW
Candlestick Chart Analysis:-
- It is important that candlesticks should not be observed in isolation. The context (past patterns) is very crucial when it comes to candlesticks analysis.
- The trader must observe the previous candlesticks and observe how they changed overtime.
- Has the body of the candlestick become larger or smaller? What about the wicks? How have they changed? These questions the trader must ask himself as he/she analyses the candlestick chart.
- This is because when the real body of the candlestick becomes larger, it indicates an increase in momentum.
- The body of the candle shows how much the price of the pair has changed over the duration of the timeframe.
OHLC of Candlesticks:-
O stands for Open
H stands for High
L stands for Low
C stands for Close
Closing is the most important thing in OHLC.
Candlestick chart is the most popular chart among traders as they are easy to read and understand.
To learn more about candlesticks, join our learning program now.
