Unless you understand Candlestick charting, you cant trade and invest effectively. Many options exist for the charting of currencies with the advancement of technology. There are several types of charts. The four main charting methods are:
1) Line Charts,
2) Point and Figure Charts,
3) Bar Charts, and
4) Candlestick charts.
The three charting methods pale in comparison with the candlestick charting for a number of reasons. 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.
Candlestick charts also feature specific patterns that you can identify and use to decide when its best time to buy, sell or wait on a trade. Why should traders choose candlestick charts over other types of charts when analyzing price action of currency markets? Trading is becoming more and more complex. The need for a consistent and dynamic charting method is more important than ever. 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 following four pieces of information are combined to make a candlestick:
Price on the Open: The price at which a particular currency pair opens on a given period is the first piece of information used to create a candlestick.
High Price: The highest price reached during that given period corresponds to the top of the candlesticks wick.
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 create 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 right 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. Download your free 82 page pdf Candlestick Charting Guide with strategy flash cards now!
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