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Candlestick charts convey information pertaining to price
action, or the movement of a currency pair’s price over the specified amount of
time. Each candlestick contains four attributes; the opening price of the
currency pair at the time the candle opened, the closing price, the high of the
time frame and the low of the time frame . On a daily chart, each candle
represents a 24 hour period; on an hourly chart each candle represents an hour,
and so on. A visual analysis of a candlestick is as follows: Wick or
Shadow: This is the high price for the candle. Body or Real Body:
This represents the difference between the opening anti closing prices. If the
candle is green, this means the close was higher than the open. If the candle is
red, this means the opening price was higher than the closing price Wick
or Shadow: This is the low price for the candle. Key Definitions: -
Body: The difference between the opening price and the closing price.
This is the wide portion of the candle that is colored red or green. Wick
or Shadow: The thin portion of the candle that represents the extreme
high and low points for the time period represented by that candle. Candlesticks
can be used to identify trend reversals in the market. Candlesticks are
important in trading. Simply put, it is because they are the best gauge of what
is going on in the market at the present time. Candlesticks give us insight into
the emotions of the market participants. Although traders may come and go over
time, human emotion remains constant. A certain series of events creates a
candlestick pattern, and when we see that pattern we know exactly what has
transpired.
Ultimately, candlesticks can easily be used to identify potential reversals of
trends in the market — especially when used in conjunction with other
indicators.
LEARN MORE
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High
Probability Trading Setups By
Kathy
Lien And Boris Schlossberg - On Sale - |
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Kathy Lien
is the Chief Currency Strategist at Forex Capital Markets LLC (FXCM). |
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Boris Schlossberg
serves as the Senior Currency Strategist at FXCM in New York where he
shares editorial duties with Kathy Lien. |
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