Candles not making sense!

[Chris Warren]

Can anyone make sense of this for me!

There are a couple of things I don't understand about candles and if there is someone out there that could shed some light....

1/ If the body of the candle represents the open and close price how come there is a overlap from one candle to the next. Shouldn't the close price be the open price of the of the next, or at least very close to it. Why is it that often there is a 50% over lap of candle bodies?

2/ Why doesn't the top of the candle body (long) and the current price stay in sinc especially near or at the end of the time period? Often the current price can be half way up the wick at the close of the period.

 

[Pharaoh]

Under normal conditions, the price should be very near the top of the body (for a long candle) for the last few seconds of a time period. The opening of the next candle should be the same price (plus or minus 1, sometimes 2 pips).

Things can get wild during high volatility. I saw a 30 pip gap from the close of a 1 min candle to the opening of the next when the ECB president dropped a really hawkish statement during a speech.

If your broker normally has big jumps between the close of one candle and the open of the next during calm conditions, check the prices from another broker.

 

[Chris Warren]

Thanks for the reply, I'll check out other charts from different brokers.

 

[rpaco]

As I said yesterday, in theory there is no gap between candles, the next candle starts instantaneously as this one ends. But because even with electronic systems there is a small amount of time taken, then where the price is moving quickly that will create a gap; but as Pharaoh says it should only be a very few pips.

Whilst you may check out other broker's charts you must remember that if you are trading it is only the chart and/or data from your own broker that matters and upon which the trades stops and limits (tps) will be executed.

 

[Pharaoh]

One other thing that did occur to me - if you are looking at some of the more exotic currency pairs, those can have big gaps between candles, especially on the shorter timeframe charts.

If you see significant gapping in the GBPUSD and EURUSD on your during normal trading times that's not anything like what other broker's charts show, it may be time to consider changing brokers.