About the Candlestick Patterns

About the Candlestick Patterns

Submitted by adil on Tue, 11/11/2014 - 09:05

Candlestick charts or patterns are used in forex trading. They are able to give you a valuable and in-depth Analysis about the price action in a single glance. The basic candlestick patterns can give an insight about trends in the market. Most of the forex chart make use of candle charts to display the fluctuation in market prices, as it is much easier to comprehend than line chart or simple bar chart. Experienced forex traders are able to identify the patterns of candlestick charts. Decisions can be made about buying or selling forex pairs based on the candlestick charts. The most commonly used patterns are described below:

Spinning Tops Candlestick Patterns: This pattern denotes the possible indecision between seller and buyer. This candlestick has both an upper shadow and a lower shadow. Every candle has a body, this is used to indicate the time when the price in opened or closed. It also has a wick, which shows the time for opening or closing price.

Island Reversal Patterns: A reversal pattern is basically, a recognizable change in the price structure.   These are very short-term reversal trends. Such patterns can be easily identified by the gap between a candlestick which can be reversed and two candles on both side of it.

Three white soldiers candlesticks pattern: This type of pattern takes place when a reversal occurs. This pattern is recognized every time long and bullish candlesticks tend to follow a downward trend.

Marubozu Candlestick Patterns: The bodies of these candlesticks do not have any shadow. This type of candlestick is either white or green, when the price is going up. This occurs when the opening is at the highest price of the day and closing is at the lowest price of the day. It does not have any wick, which indicates that this indicator is not advisable. 

Engulfing Candlestick Patterns: This pattern is either bullish or bearish. For a bullish pattern a relatively larger white body which entails a smaller black body in a downward trend is considered. And similarly a bearish trend is observed when, every time in an upward trend a long black body, entails a small white body.

Kicker Patterns: These are the most well recognized candlestick pattern. This pattern is highly encouraged by the forex traders as it gives a predictable and reliable trend about the market prices. This pattern is recognized by intense reversal in price during the time period of two candlesticks.

There are so many other candlestick patterns which are used by traders. It is important to develop an understanding about all the patterns before using them in trading. These patterns allow you to work the price action in the existing strategy which is being used for trading. They can also be used in order to spot market reversals and resumptions of trends, which can give any trader a boost in the forex trading market.