Candlestick Charts
Unless you understand Candlestick charting, you cant trade and invest effectively in securities or currencies. It is essential that you understand Candlestick charting. Many options exist for the charting of currencies and securities now with the advancement of technology. There are several types of charts easily available on the charting software. The four main charting methods are: 1) Candlestick charts, 2) Line Charts, 3) Point and Figure Charts and 4) Bar Charts.
The three charting methods pale in comparison with the candlestick charting for a number of reasons.[ad#dfi-adsense-300x250-alignleft]One of the best features of candlestick charting is its visual appeal and readability. With a simple glance on the candlestick charts you can understand whats going on with the price of a currency pair.
You can also tell whether the buyers or sellers have dominated a given day. You can also get a sense of how the price is trending with the candlestick charts. You can easily spot the opening and closing price of a currency pair on a candlestick charts. These price levels can be an important area of support and resistance for 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 decide when its best time to buy, sell or wait on a trade.
Traders need easy 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 important 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 create a candlestick is the price at which a particular currency pair opens on a given period. Depending on whether that price is bullish or bearish, opening price can be the bottoms edge or the top edge of a candles body.
High Price: The top of the candlesticks wick corresponds to the highest price reached during that given period.
Low Price: The bottom of the candlesticks wick corresponds to the lowest price that a currency pair reaches during a period.
Price on the Close: At the end of the given period, the closing price of the currency pair is the last piece of information used to create a candlestick.
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 right away that the up day has a white candle and the down day has a black candle. That simple difference alone clearly reveals the nature of price action that took place during that period.
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.
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