ChartsHow Do We Analyze The Candlesticks?


  • Charts are the main way to read the Forex market and other stock markets.
    The chart is the instrument that focuses on technical analysis as it allows a precise study of current and historical price movements, predicting future market trends.

    The 3 main types of charts for Forex are the Line Chart, the Bar Chart and the Candlestick Charts.
    The most used is the candlestickchart since it is more graphically intuitive with all necessary price information.

     

    • Timeframe

    Each vertical bar that forms the graph represents the chosen period: if we selected M1 timeframes for each of the present candles, it represents 1 minute, if we chose M30 timeframes, each of the present candles represents 30 minutes, and so on.
    For example, an M1 chart that has 100 candles adds up that we are analyzing 1 hour and 40 minutes of price movement.

     

    • Candles

    Each single candle manages to provide the following information:
                    - Opening prices.
                    - Closing price.
                    - Maximum price reached (High).
                    - Minimum price achieved (Low).

    Each candle is made up of a body and two shadows. The body can tell us the opening and closing price of the candle, while the shadows indicate the minimum (Lowest price) and maximum (Highest price) value reached during the period represented by the candle.

    For the graph to beintuitive, colors are also used. Usually the color of the candle is green when ascendingi.e. closing price is greater than the opening price; while the descending candle is redi.e. closing price is less than the opening price.

     

    • Line charts

    Although the Candlestick chart is the most popular and user friendly chart, mainly because of its popularity with price action using Japanese candle sticks, some other strategy may require the use of Line charts. Line charts simply represent a connection of the closing prices (bid), on MetaTrader platform.

    Some Elliot Wave enthusiasts suggest carrying out the wave count  using the Line chart, thereby reducing the level of subjectivity with the high and Low price information.

    Also, in order to view some other attached indicator without the candlestick or the bar charts getting in the way, a trader may switch to the line chart and change tis setting on the MetaTrader platform. The properties window can be launched by pressing the F8 Function key on the keyboard. This will enable editing of the candlestick and line settings on the MetaTrader platform.

Members Comments

  1. Profile photo gravatar of prolific
    prolific (prolific)
    says:

    Please how does it work, I’m new in here

    • Profile photo gravatar of Granville Herzog
      Granville Herzog (thalia67)
      says:

      Charts are very easy to understand. I would recommend you to study Japanese candlestick graphs because they are used all over the world for analysis. Google can help you alot in learning. If you have any question, I’m here to help.

  2. Profile photo gravatar of Matilde Ritchie
    Matilde Ritchie (gretchen-jast)
    says:

    Worth reading this topic. I am new here, and I needed help regarding charts. Now I will follow the same candles in my chart for analysis. Thanks.

  3. Profile photo gravatar of Eriberto Buckridge
    Eriberto Buckridge (jackie-jakubowski)
    says:

    line chart draws a line from one closing price to the next closing price.
    It shows the opening and closing prices, as well as the highs and lows. The bottom of the vertical bar indicates the lowest traded price for that period, while the top of the bar indicates the highest price paid. The vertical bar itself indicates the currency pair’s trading range as a whole. The horizontal hash on the left side of the bar is the opening price, and the right-side horizontal hash is the closing price. A bar is one segment of time, whether it is one day, one week, or one hour.
    Candlestick charts show the same price information as a bar chart, opening, closing, high and low prices during the period. In candlestick charting, the larger body in the middle indicates the range between the opening and closing prices. Candlesticks are more visual than bar charts. With the candlesticks, you can recognize some candlestick patterns. Candlesticks are good at identifying market reversals.

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