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Candlestick patterns are customary indicators that abet a trader to investigate candlestick charts. This can be advantageous when producing simple systems that will brief you when a trend is evolving so that you can start a trade.
The open, high, low, close rate of the stock, commodity or currency over a period of time is displayed in the candlestick form. This period can be chosen by the trader.
5 minutes is routine for day traders but you may select 15 minutes in some circumstances. For longer duration trading you can pick longer periods.
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The difference between open and close points are marked by the candle body. If it’s green/blue (for colored charts) or white then the lower borders of the rectangular body is the open and price went higher during the particular period. A red (for colored charts) or black indicates the upper boundary is the opening price, while the price fell during that period.
Vertical lines sticking up from top and down from the bottom are called wicks. he highest stage the price ever hit is the top of the upper wick area. The low is the bottom of the lower wick.
This approach of analysis helps the trader to know at a glance if values tumbled or went up during the analysis time frame. Bear markets are signified by green or white candles whereas bull markets are illustrated by red or black candles.
You can also examine at a glance how the highs and lows ascribe to the opening and closing rates. Then you may have an absolutely solid candle without a wick.
It’s called a Marubozu pattern. Prices never went greater or less than the opening and closing prices in this case.
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The opening was the high price & the closing was the reduced price if the candle was red or black. On the other hand, green or white candle signifies the low was the opening price while the high was the closing price.
A long body indicates a fairly steady direction either downward or upward. A lengthy wick positioned on either bottom or top would signify a reversal.
For accurate trend index a candlestick must be studied in conjunction with the others that preceded it. You then can advance to make more detailed candlestick patterns that will denote probable future trends.
Disclaimer: Currency trading is not risk free, can end up in significant losses, and is not suitable for everyone.
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