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One of the traders accessories in developing formulas of candlestick charts are the candlestick patterns. This can be advantageous when producing simple systems that will brief you when a trend is evolving so that you can initiate a trade.
The shape of the candlesticks refer to the high, low, open and closing price of stocks, currencies or commodities during a given period. The period covered is typically user selectable.
5 minutes is routine for day traders but you could opt for 15 minutes in some circumstances. Longer periods may be picked for longer term trades.
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The difference between open and close points are designated by the candle body. If it’s a white or blue / green on charts with color, the lower body is the open and while you were considering it, the market price marked up. A red (for colored charts) or black indicates the upper boundary is the opening price, whilst the price cascaded during that period.
In candles, vertical lines pointing up from the top and down from the bottom are called wicks. The top of the upper segment of wick is the highest position that the price ever achieved during the period. The bottom of the lower wick is the low.
The trader can decide directly the price behavior from this analytical method. Bear markets are signified by green or white candles whereas bull markets are illustrated by red or black candles.
The connection of open and close values to high and low values can be discerned quickly. Then there is a solid candle without a wick.
The name for this is Marubozu pattern. In this scenario the values never went lower or higher than their opening and closing points.
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he high value as opening price and low value as closing price is represented by the red or black candle. The low price is the open and the close would be the high price when the candle is green or white.
A long body means a relatively steady movement either up or down. A lengthened wick either top or bottom illustrates a reversal.
For accurate trend identification a candlestick should be examined in conjunction with the others that preceded it. You then can continue to make more intricate candlestick patterns that will signify probable future trends.
Notice: Forex trading is speculative, can result in material losses, and is not appropriate for every person.
