One of the traders aids in developing methods of candlestick charts are the candlestick patterns. They are quite indispensable when one is engaged in the creation of basic systems that would indicate a trend formation so you can start trading.

Candlesticks have a formation that demonstrates the open, high, low and closing price of a currency, stock or commodity over a stretch of time. You can basically choose the duration that you want to show.

5 minutes is universal for day traders but you may select 15 minutes in some situations. For longer duration trading you can pick longer periods.

The candle body defines the diversity 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. A red (for colored charts) or black indicates the upper boundary is the opening price, while the price cascaded during that period.

In candles, vertical lines pointing up from the top and down from the bottom are known as wicks. The highest price ever obtained during the period is the top of the upper wick section. On the other hand, the lowest value is the bottom of the lower wick part.

The trader can conclude immediately the price behavior from this analytical method. Bear markets are illustrated by green or white candles whereas bull markets are signified by red or black candles.

You can also examine at a glance how the highs and lows apply to the opening and closing rates. You could have a candle that is absolutely solid, minus the wick.

This is named as the Marubozu pattern. In this situation the values never went lower or higher than their opening and closing stands.

The opening was the high price and the closing was the reduced price if the candle was red or black. The low price is the open and the close is the high price when the candle is green or white.

A longish body means a relatively steady movement either up or down. A lengthy wick positioned on either bottom or top would denote a reversal.

For accurate trend identification a candlestick should be considered in conjunction with the others that preceded it. Then you can devise more complex candlestick patterns indicating the plausible trends you are likely to experience.

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