What is candlestick in forex?
What is candlestick in forex?
I know it is very basic concept in term of trading but i was looking to find out about candlesticks and how its patterncan help me predict the price movements
Re: What is candlestick in forex?
In forex the candlestick provides a visual representation of price movement over a selected time period. It consists of three main points closing price, opening price and the wicks. Using the candlesticks we identify if the market is bullish (price rising) or bearish (price decreasing). Candlesticks combined create many different chart patterns which are then used by traders to predict the future price movements in the market.
Opening Price: The price at which a trading session starts for a currency pair.
Closing Price: The price at which a trading session ends for that same pair.
Wicks: Wicks also known as shadows are the thin lines above and below the body of the candlestick, showing the highest and lowest prices reached during the session.
There are many different candlesticks patterns indicating different things but instead of learning all of them and complicating things you can just focus on the three important candlesticks patterns which are
Pin Bar: A candlestick with a small body and a long wick. It shows a potential reversal or rejection of price levels.
Engulfing Pattern: This occurs when one candlestick fully covers the previous one, signaling strong momentum in the direction of the engulfing candle.
Inside Bar: A smaller candlestick that forms entirely within the range of the previous candle, indicating a potential breakout.
The main reason to use only these three candles is they are very easy to identify and all candlesticks patterns can be converted into engulfing patterns on higher time frame..
Multi-Timeframe Analysis
This is one of the most important steps when it comes to technical analysis in forex. The concept of the multi-timeframe analysis is that you don’t need to switch between multiple time frames to look for a specific candle formation such as pin bar or engulfing candlestick rather you should be able to identify all the time frames while studying a single timeframe.
For example, look in the image, there are six candlesticks. Now convert these six candlesticks into two using the opening price of the first candlestick and closing price of the last candlestick. This will form a engulfing candle. Using this you should be able to identify these candles on multiple timeframes.
Take a look at another image as an example and combine the candle into only two. This will form a pin bar candle which is the best candlestick to enter a trade.
Opening Price: The price at which a trading session starts for a currency pair.
Closing Price: The price at which a trading session ends for that same pair.
Wicks: Wicks also known as shadows are the thin lines above and below the body of the candlestick, showing the highest and lowest prices reached during the session.
Pin Bar: A candlestick with a small body and a long wick. It shows a potential reversal or rejection of price levels.
Engulfing Pattern: This occurs when one candlestick fully covers the previous one, signaling strong momentum in the direction of the engulfing candle.
Inside Bar: A smaller candlestick that forms entirely within the range of the previous candle, indicating a potential breakout.
The main reason to use only these three candles is they are very easy to identify and all candlesticks patterns can be converted into engulfing patterns on higher time frame..
Multi-Timeframe Analysis
This is one of the most important steps when it comes to technical analysis in forex. The concept of the multi-timeframe analysis is that you don’t need to switch between multiple time frames to look for a specific candle formation such as pin bar or engulfing candlestick rather you should be able to identify all the time frames while studying a single timeframe.
For example, look in the image, there are six candlesticks. Now convert these six candlesticks into two using the opening price of the first candlestick and closing price of the last candlestick. This will form a engulfing candle. Using this you should be able to identify these candles on multiple timeframes.