1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Chapter 9, Part II. How to interpret different candlesticks?

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, May 20, 2011.

  1. Administrator

    Administrator Just Administrator :-)

    Joined:
    Sep 24, 2007
    Messages:
    5,526
    Likes Received:
    423
    Part II. How to interpret different candlesticks? [​IMG]
    Pipruit: Sir, I’ve found that there could be different candles – with big and small bodies, also with long and short shadows. Also some candles seem skewed, because have different shadows. Sometimes the lower shadow is longer than upper one, sometimes vice versa. Does it make any sense? Should we pay attention to this?​

    [​IMG]

    Commander in Pips: Absolutely.

    Commander in Pips: We must do it, especially on longer time frames. In fact, any candle shows us about the price action during the period, and if this period is a month – then this information will be significant. The greater the period is - the more important this information. Although a particular candle, say, on a 5-min chart is not of as much importance as on a monthly, the repeating of some types of candles (i.e. price action), still could be very important, even on small time-frames. So we have to study how to understand the information that is brought by a candlestick.

    Pipruit: So, I’ve suspected something like that…​

    Commander in Pips: Let’s talk about candle bodies first. The longer the body is, the greater difference between open price and close price. It means that depending on the direction of price movement (up candle or down candle), buyers or sellers were stronger than usual. If this is an up candle – it means that price has risen more than usual. It tells us that buyers were more active and strong during this period and were able to raise price significantly. Buyers definitely have taken control during this period and buying intensity on the market was high.

    The same is true for down candles. Long body on a down candle (black, as a rule) means that price has fallen more than usual. It tells us that sellers were more active and strong during this period and were able to reduce price significantly. Sellers definitely have taken control during this period and selling intensity on the market was high.

    Short bodies assume little buying or selling activity. Very often such bodies are treated as “market indecision”, because there is no prevailing by either bulls (i.e. buyers) or bears (i.e. sellers). Here is what they look like:

    Long and short candles
    [​IMG]
     
    #1 Administrator, May 20, 2011
    Lasted edited by : Feb 15, 2016
    fran alvarez likes this.

Share This Page