How To Read Candlestick Charts. Video

A rudimentary introduction to technical analysis and trading charts. Watch how the market behaves and learn how you can benefit from its changing temperament.

Candlestick charts are very popular with Forex traders because they provide more information than a simple line can. They provide data during a certain time period. Each candle shows its own opening, closing, maximum and minimum prices, and you can usually determine the time scale by selecting on the platform’s toolbar – seconds, minutes, hours – anything up to a month.

The candles themselves have wicks both above and below – a 2-sided candle. The top wick is called the shadow, and the bottom wick is called the tail. The middle part is the body. Candles are green if the asset’s price rose during the time period described and red if it dropped. The shadow reaches up to the highest price during the period and the tail reaches down to the lowest. The taller the shadow, the stronger the support; the longer the tail – the stronger the resistance.

But candlestick charts don’t only provide information; they can sometimes be used to identify trends and even predict them. Thus, for example, a candlestick with no tail but a tall shadow suggest that the market is shifting from bearish to bullish. One with no shadow but a long tail might be hinting at a shift from bullish to bearish.

Open a free $50,000 demo account and start practicing analyzing financial charts. Learn to use indicators and charting tools; and take your first step to financial success.