Learn to Identify Market Trends

Identifying Market Trends with Candlestick Charts

In order to analyze the Forex market, it is important to understand the structure of candlestick charts. The basic building block of a candlestick chart is a candle. Understanding how to read a candle is essential to identify whether an asset follows a specific trend.A candle may either rise or fall. The green candle in item 1 indicates that prices are rising while the red candle indicates the opposite. It is important to distinguish between the main body of a candle and the lines that extend from it.In the below example, the opening value of the red candle is 2.95 while the closing value is 2.25. The values at the very top and very bottom of the candle (3.00 and 2.00) represent the range of price values that the asset in question reached. Thus, even though the red candle opened at 2.95 and closed at 2.25, it rose as high as 3.00 and fell as low as 2.00 during the period in question.