You cant trade and invest effectively, unless you know Candlestick charting. With the advancement of technology, many options exist for the charting of currencies. There are several types of charts. The four main charting methods are: 1) Line Charts, 2) Bar Charts, 2) Point and Figure Charts and 4) Candlestick charts.
For a number of reasons, the three charting methods pale in comparison with the candlestick charting. With a simple glance on the candlestick charts you can know whats going on with the price of a currency pair. One of the best features of candlestick charting is its visual appeal and readability.
You can easily spot the opening and closing price of a currency pair on a candlestick charts. You can also get a sense of how the price is trending with the candlestick charts. These price levels can be an vital area of support and resistance for a given day. You can also tell whether the buyers or sellers have dominated a given day.
Why should traders choose candlestick charts over other types of charts when analyzing price action of currency markets? Candlestick charts feature specific patterns that you can identify and use to choose when its best time to buy, sell or wait on a trade.
Traders need simple to read charts that allow them to make quick decisions and efficiently analyze patterns. Candlestick charting offers those benefits and many more. The need for a consistent and dynamic charting method is more vital than ever. Trading is becoming more and more complex. The following four pieces of information are combined to make a candlestick:
Opening Price: The first piece of information used to make a candlestick is the price at which a particular currency pair opens on a given period.
High Price: The top of the candlesticks wick corresponds to the highest price reached during that given period. If a currency pair opens at a certain price and then trades consistently lower than that price throughout that period, there wont be any wick at all above the candle.
Low Price: The bottom of the candlesticks wick corresponds to the lowest price that a currency pair reaches during a period.
Closing Price: The closing price of the currency pair at the end of a given period is the last piece of information used to make a candlestick. Depending on the price action, the closing price can be the top edge of the candles body if the price action is bullish. It can be the bottom edge of the candles body if the price action is bearish.
Candlesticks that represent bullish price action appear white on the chart and candlesticks that represent bearish price action appear black. You can gain far more insight into a periods trading by looking at the candlestick than you can by looking at another type of charting tool.
You can tell straight away that the up day has a white candle. Similarly the down day has a black candle. That simple difference alone clearly reveals the nature of price action that took place during that period and can be very helpful to you.
Candlestick charts quickly clue you on the type of buying and selling thats been going on during a given period. Candlestick charting also tell you where it may occur again.