Candlesticks are formed using the open, high, low
and close. If the closing price is above the opening price it’s a BULL market
or a market where buyers are very many and very strong and the candlestick on
your forex trading chart will be hollow.
If the opening price is above the closing price it’s
a BEAR market, its market full or sellers no body wants currency and their very
willing to sell. The candlestick on your chart will be filled or black.
Long candle sticks on a chart mean strong buying or
selling pressure, while short candle sticks mean little buying or selling
pressure or activity.
BULL mean BUYERS, while BEAR mean
SELLERS.
CANDLESTICK SHADOWS
I’ve always wondered about the concept of shadows
little did I know that I will come across it while learning to trade using technical analysis.
Candle sticks have shadows, this shadows tell a lot
about each trading session. The lower shadow of a candlestick shows the
sessions high, the lower shadow shows the sessions low.
Candle sticks with long shadows show that traders
like financial institutions, you and me traded
pass the open and closing price. While candle sticks with short shadows
show that many traders actions was confined near the open and closing
price.
VARIATION IN CANDLE STICK SHADOWS
Some candle sticks have long upper shadows and short
lower shadow or short upper shadow and long lower shadow, what do they mean?
If a candle stick has a long upper shadow and short
lower shadow it means that the market was basically a BULL market, buyers where
very strong moving the market passed it’s open price but the lower shadow shows
that sellers still managed to sell a lot of currencies to end the session at
it’s open price.
If a candle stick has a short upper shadow and a
long lower shadow it means that SELLERS own the market but the long lower
shadow shows that buyers bought enough currencies to end the trading session at
its open price.
CANDLE STICK PATTERNS/ REVERSAL PATTERNS
· Spinning Tops
< · Marubozu
* · Doji
< · Hammers
* · Hanging man
* · Shooting star
· Inverted hammer
Spining Tops: I call this candle stick pattern a
steal mate. Spinning tops mean neither buyers nor sellers are able to control
the market. This pattern is represented by a short candle stick with long
upper and lower shadows, it does not matter if the short candle stick is filled
or hollow.
Marubozu: this is a candle stick that has no
shadows, this means that the open and close price is the same as the high and
low. If the marubozu candle stick is a long hallow stick it means that the
whole session is controlled by the buyers and if it’s a filled it means that
the sellers control the whole session.
Doji: this candle stick on your plate form
should appear as a very thin line with either a long upper or lower shadow, a short
upper or lower shadow, a long upper and short lower shadow, a short upper and
long lower shadow or no shadows at all. If this doji candle stick appears on a
trend (I will say what a trend is later) it means a struggle between buyers
sellers and price moved above and below the opening and closing prices during
the session but, managed to close near the open price.
TYPES OF DOJI CANDLE STICK ON A FOREX TRADING PLATE
FORM
1. Long- legged doji
2. Dragon fly doji
3. Gravestone doji
4. Four price doji
Hummer: this candle stick looks like a hummer, it
has a small body with no upper shadow but a very long lower shadow. I will talk
about what it means later.
Hanging man: is very similar to the hummer candle
stick, it even looks like the hummer- small body with an absent upper shadow
but a very long lower shadow- but it means something totally different from the
hummer.
Inverted hummer and shooting star: the inverted
hummer and the shooting star are the opposite of the hummer and the hanging
man. The inverted hummer has a small body with an absent lower shadow but a
very long upper shadow likewise the shooting star but, they mean different
things.
Thanks for reading.
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