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One of the important indicators that assist traders decipher candlestick charts are candlestick patterns. Candlestick patterns are instrumental for making uncomplicated systems that will advise you regarding the evolution of a trend in order for you to commence trading.

Candlesticks have a structure that displays the open, high, low and closing price of a currency, stock or commodity over a time frame. This period can be picked by the trader.

Day traders generally choose 5 minutes however 15 minutes may be your choice for specific cases. Longer periods may be selected for longer term trades.

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The candle body defines the difference of the close and open points. If it’s green/blue (for colored charts) or white then the lower boundaries of the rectangular body is the open and price went higher during the consideration period. Should it be black or red in charts with color, the top border indicates the opening value and during that period, the price descended down.

The wick is the label given to the vertical lines that generally stick up from the top and down from the bottom of the candle body. The top of the upper part of wick is the highest spot that the price ever attained during the period. The bottom of the lower wick is the low.

This kind of analysis allows the trader to know at a glance if values slashed or went up during the analysis time frame. Bearish tendencies or rise in price are represented by green or white candles while bullish trends or fall in price would be illustrated by red or black candles.

Aside from this, the high and low relative to open and close prices are directly obvious. You might have a candle that is extensiovely solid, minus the wick.

This is named as the Marubozu pattern. Prices never went more or lower than the opening and closing prices in this case.

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he high value as opening price and low value as closing price is designated by the red or black candle. The low price would be the open and the close would be the high price when the candle is green or white.

A longish body means a relatively steady movement either up or down. A elongated wick either top or bottom denotes a reversal.

For accurate trend identification a candlestick needs to be studied in conjunction with the others that preceded it. You then can go ahead to make more intricate candlestick patterns that will signify probable future trends.

Note: Foreign Exchange trading can be dangerous, can result in considerable losses, and is not suitable for everyone.

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