Information about Candlestick Chart Patterns
Friday, 3. September 2010
One of the important indicators that facilitate traders understand candlestick charts are candlestick patterns. Candlestick patterns are valuable for making easy systems that will advise you regarding the evolution of a trend in order for you to start trading.
The open, high, low, close price of the stock, commodity or currency over a period of time is illustrated in the candlestick form. The period covered is generally user selectable.
The ecommended time period is 5 minutes but you may desire in some situations to consume 15 minutes. Typically, longer periods are employed for longer term trading.
The body of the candle characterizes the difference between the open and close values. If it is white (or green/blue on a colored chart) the open is the lower boundary of the elongated body and the price marked up during the period you are studying. If it is black (or red on a colored chart then the opening price is the top boundary and the price went down.
The wick is the title given to the vertical lines that generally stick up from the top and down from the bottom of the candle body. The top of the upper segment of wick is the highest position that the price ever attained during the period. The bottom of the lower wick is the low.
The advantage of this method of analysis is that the trader can without delay see whether prices rose or fell over the period. A white or green candle manifests a rising price or bearish tendency and a black or red candle illustrates a dropping price or bullish tendency.
The relationship of open and close values to high and low values can be noted immediately. Then there is a solid candle devoid of a wick.
The name for this is Marubozu pattern. This means that the opening and closing prices were never reached in either direction by the low and high prices.
The high value as opening price and low value as closing price is represented by the red or black candle. On the other hand, green or white candle means the low was the opening price while the high was the closing price.
A longish body means a relatively consistent movement either up or down. A lengthy wick detected on either bottom or top would denote a reversal.
A candlestick has to be elucidated along with the previous ones in order to ensure precise trending. From there relatively intricate trends can be devised to demonstrate the trends coming up.
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