How to Read a Candle Stick Chart

          When we talk about charting technical traders are been confronted by various choices . CandleStick Charts are the first choice of most forex traders, when it comes to  charting, the candle stick charts are greatly different to bar charts which are used in other financial markets.Amazingly after learning to analyze candlesticks, most of the traders often find they are now able to identify different types of price action quickly they could not  pinpoint before with traditional charts.

when planning a trading strategy finding these points will help a trader and cause an advantage for them . So let’s get started learning about how to read a candlestick chart!

Way to Read The Candles.

           Typical shape of the candlestick is shown in the image below. Body of a price candle consists of three specific points which are :-

• 1.Opening Price
• 2.Closing Price
• 3.Wicks or shadows. 

          The first thing we should take into consideration is the opening and closing prices.These points tells us for our selected period where price started and ended up resulting construction of the body of the candle. It is very important to note the color of the body of a candlestick (white for down and green for up). By knowing this, we can identify quickly if the market is trading higher or lower for our selected period.

        Next we have the wicks of the candlesticks, which are also called as shadow. These points are very important because they show the extremes in price for a specific charting period. We can identify the wicks or shadow more quickly as they have a thinner body. Here the strength of candlesticks becomes apparent. Reading candlesticks will help us to keep our eye on market momentum and stay away from the static of price extremes.

Uses in Trading

        Once we are familiar to reading the basics of a candlestick chart, they will open an array of trading opportunities for us. While as a trader we should not rely on candlestick analysis alone in our strategies. Having a knowledge of reading these charting system gives us clues of market sentiment and direction. Professional Forex traders always look for specific patterns or a series of candlesticks in their analysis to gauge future price movement and set trading orders. We will continue our discussion on candlestick charts and in future will discuss about reversals and continuations patterns.