The Candlestick (Japanese Candles) charting technique is a method of technical analysis of the Forex market that allows traders to price movements of prices over a certain period of time. The candlestick patterns show the market sentiment and give signals about possible trend reversals.
Japanese Candlesticks are one of the most popular types of technical analysis in the currency market. Coming from Japan in the XVIII century and is a high demand among world traders today. Japanese candlesticks get their names from graphic shapes, because the elements look like candlesticks. This graph shows the relationship at price opening and closing level, and shows the maximum and minimum points of the price within a certain time frame.
The lower horizontal line shows the open price (open), the higher part is the closing price (close). The higher and lower vertical lines indicate the maximum (high) and minimum (low) prices. In accordance with changes in currency values for some periods, candlestick bodies are colored in certain colors, usually black or white.
• The same value at the open and close prices is shown as a horizontal line on the chart, and the candlestick body forms a cross pattern
• If the opening price exceeds the closing price, the body will be black which indicates a decrease in market trends.
• If the opening price is below the closing price, the body will remain white indicating the market’s upward trend.
• Candlestick body describes the difference between open and close prices.
• As soon as all candlestick elements are set and the body is completed, the chart will move to the right and the new candlestick will rise at another time frame.
In that case, the graph which is a candlestick stage shows the dynamics of price movements and allows traders not to spend their time doing calculations.