You already learnt what candlestick charts are so now it's time to learn what candles actually are, and how to use candle patterns to your advantage. Reading candlesticks can reveal to you a lot of very useful information, about the market. This information can make you a lot of pips.
First you need to learn how to read the information provided by a candle. So here is a quick glossary:
Bullish Candle - In financial markets, the term bullish refers to any long move. You already learnt that going long or taking a long position means buying, and expecting the rate to go up. A bullish candle is a long candle that forms when the price goes up.
Bearish Candle - In financial markets, the term bearish refers to any short (sell) move. Bearish candles form when the price moves down.
Body - The candle body is the space between the open and the close of the candle. If the body is white it means the candle closed higher than it opened. If it is red it means it closed lower than it opened.
example 1: You're watching a EUR/USD 1hr chart. The price opens at 1.4200 and moves up 100 pips to close at 1.4300 giving you a bullish (white) body.
example 2: You're watching a EUR/USD 1hr chart. The price opens at 1.4200 and moves down 100 pips to close at 1.4100 giving you a bearish (red) body.
The purpose of candlestick charting is strictly to serve as a visual aid, since the exact same information appears on an OHLC bar chart. The advantages of candlestick charting are:
• Candlesticks are easy to interpret, and are a good place for beginners to start figuring out chart analysis.
• Candlesticks are easy to use! Your eyes adapt almost immediately to the information in the bar notation. Plus, research shows that visuals help in studying, it might help with trading as well!
• Candlesticks and candlestick patterns have cool names such as the shooting star, which helps you to remember what the pattern means.
• Candlesticks are good at identifying marketing turning points - reversals from an uptrend to a downtrend or a downtrend to an uptrend. You will learn more about this later.
What You've Learned About Candle Basics so Far ?
• Bullish candles form when the rate moves up. If you take a long position you want to see bullish candles.
• Bearish candles form when the rate moves down. If you take a short position you want to see bearish candles.
First you need to learn how to read the information provided by a candle. So here is a quick glossary:
Bearish Candle - In financial markets, the term bearish refers to any short (sell) move. Bearish candles form when the price moves down.
Body - The candle body is the space between the open and the close of the candle. If the body is white it means the candle closed higher than it opened. If it is red it means it closed lower than it opened.
example 1: You're watching a EUR/USD 1hr chart. The price opens at 1.4200 and moves up 100 pips to close at 1.4300 giving you a bullish (white) body.
example 2: You're watching a EUR/USD 1hr chart. The price opens at 1.4200 and moves down 100 pips to close at 1.4100 giving you a bearish (red) body.
• Candlesticks are easy to interpret, and are a good place for beginners to start figuring out chart analysis.
• Candlesticks are easy to use! Your eyes adapt almost immediately to the information in the bar notation. Plus, research shows that visuals help in studying, it might help with trading as well!
• Candlesticks and candlestick patterns have cool names such as the shooting star, which helps you to remember what the pattern means.
• Candlesticks are good at identifying marketing turning points - reversals from an uptrend to a downtrend or a downtrend to an uptrend. You will learn more about this later.
What You've Learned About Candle Basics so Far ?
• Bullish candles form when the rate moves up. If you take a long position you want to see bullish candles.
• Bearish candles form when the rate moves down. If you take a short position you want to see bearish candles.
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