How To Read Candle Graphs


Read on to find out what the bullish and bearish hammers warn about. The next candlestick opens above but then closes below the midpoint of the prior bullish candle. The longer is the bearish candlestick, the stronger is the trend reversal down.


There is no special software or hardware to install or download if you want to read candlestick charts. Most forex brokers that use the MT4/MT5 platforms let traders switch between candlestick, bar and line charts directly through your web browser. Once you learn how to correctly read candlestick patterns, you can use this skill as part of a broader trading strategy.

Although the price has been driven up, there may be a chance the recovery is temporary, and bears are about to take control of the market. Candlestick charts are comprised of a collection of multiple candles, and each of them represents a predetermined period of time. As commonly echoed, past performance is not an indicator of future results. With this in mind, it is best to learn more trading techniques and combine these techniques with the interpretation of candlesticks so you can make the most of your experience on In a bearish engulfing, a green candle is followed by a larger red one.

The dailyETHUSD chart shows a hanging man within the dark could cover pattern. The combination of two reversal patterns at the trend’s high is a strong signal to enter short trades. A bearish harami cross more accurately predicts the top of an uptrend than a bullish harami cross signal the bottom of a downtrend. You can see a bearish harami pattern in the 4HTesla Inc chart, followed by the beginning of a downtrend.

Bullish Engulfing Candlestick Pattern: What Is and How to Trade

If the is higher than the open the candle is green; if the close is lower than the open the candle is red. These four data points that make up a candlestick chart are the same four data points that make up a bar chart. The only difference between the candlestick chart and the bar chart is the look of the individual trader’s chart. A shooting star candlestick occurs during an uptrend and has similar opening, closing and low prices, but a much higher high price.

The morning and the evening star are triple candle patterns. Because the bullish and bearish pressures in the market have reached equilibrium. Since these forces on the price are roughly equal, it is very likely that the previous trend will end.

  • An exception is possible if the body of the first candle is so small that it resembles a doji.
  • It usually develops after an uptrend with a dip that falls lower and lower and is seen as a predictor that the decline will continue into a full-blown downtrend.
  • A hammer at the low of a downside momentum signals a bearish trend reversal up, suggesting the price should be rising.
  • In this case, 97% of readers who voted found the article helpful, earning it our reader-approved status.
  • There is no special software or hardware to install or download if you want to read candlestick charts.

To how this works, let’s look at how each bar is constructed. The top of the third candle is within the upper half of the first candle. Resources Learn Browse our latest articles and investing resources. Long-legged Doji – It shows a state of market trend uncertainty.

This is a candlestick chart with blue candles, for the most recent 21 days in SimulatedStock.mat. Plots a candlestick chart from a series of opening, high, low, and closing prices of a security. If the closing price is greater than the opening price, the body is unfilled; otherwise the body is filled. For using candlestick patterns, you only need to have a basic understanding of how the candlesticks are formed. Also having some idea about the various ways in which these candlesticks can be interpreted would be useful.

The most popular time frame is the daily one, where the candle indicates the open, close, and high and low for one single day. This represents the power of a candlestick chart, that long wick was able to tell us so much about the mindset of the market in just a second. The lowest point of the lower wick indicates the lowest traded price for that time period. If the open or close was the lowest price, then there will be no lower wick.

How To Read Candlestick Charts?

The Japanese candlestick chart is the foundation of most technical analysis and gives insight into market sentiment. It displays the high, low, open, and close price of an asset over a specific period of time. It originated in Japan in the 1700s and was used by Japanese rice traders to track the market prices and daily momentum of rice. Hundreds of years later, it became a popular global price chart, used on an everyday basis in financial markets like Wall Street.

stock market

A bearish harami cross occurs in an uptrend, where an up candle is followed by a doji—the session where the candlestick has a virtually equal open and close. It is identified by the last candle in the pattern opening below the previous day’s small real body. The last candle closes deep into the real body of the candle two days prior. The pattern shows a stalling of the buyers and then the sellers taking control. Just like a bar chart, a daily candlestick shows the market’s open, high, low, and closeprice for the day.

What is a candlestick?

Before taking action based on any such information, we encourage you to consult with the appropriate professionals. We do not endorse any third parties referenced within the article. Market and economic views are subject to change without notice and may be untimely when presented here. Do not infer or assume that any securities, sectors or markets described in this article were or will be profitable. Historical or hypothetical performance results are presented for illustrative purposes only. Although there should be an easy answer to this question, the fact is that there are different answers depending on the source.

The price high is the highest level reached the price over the period. If there is no shadow, the open or close price is the highest over the period. Actually, this article helps me a lot about observing the candlestick chart but I have some unanswered questions. »

This shows a series of three bearish candles with wide enough bodies and short wicks, with some overlap on each other’s starting and closing price ranges. A bullish candlestick pattern shows up after a series of downward price movements and before the succession of price increases. Meanwhile, a bearish candlestick pattern shows up at the peak of a rising price chart and precedes a price fall. A candlestick shows the change in the price of an asset over a period of time. As the basic indicator in a crypto chart, each candlestick represents a specific price movement, including the opening and closing prices, as well as the highest and lowest price points.

In this case, « fill » colors are used for filled candles and « border » colors are used for the unfilled ones. Possibility to display any number of individual trend sets on a chart that may be altered to display technical indicators. This is also the reason why some back-tested methods that are optimized on historical data do very well in theory, but then crash and burn in real-time trading. After a period of price decline, the bullish three line strike is thought to herald a period of a price increase.

In fact, a lot of well-known technical indicators in trading crypto are based on how combinations of candlesticks appear on a chart. Crucially, the three red bars in the countertrend should all fall within the body of the first tall green candle. And they are followed by another tall green candle that confirms the resumption of the bull market. Dragonfly doji have a long lower wick, signifying a bear run in the session, followed by a rally back to its opening price. Gravestone doji are the opposite, with a tall upper wick indicating a rally that was taken over by bear traders. That means the open and close prices were also the highest and lowest points the market hit in the session.

What Is a Candlestick Chart?

Candlestick charts look complicated at first glance, but they’re actually quite simple. Candlesticks reflect market sentiment and can often be used to predict what is going to happen next. “High” is the highest recorded price of the asset in that timeframe. The purpose of this website is solely to display information regarding the products and services available on the App. It is not intended to offer access to any of such products and services. You may obtain access to such products and services on the App.

The trend lines, which are drawn above the highs and below the lows, begin to converge as the upwards movement loses momentum and sellers step in to slow the rate of growth. Often, there is a price breakout below the lower trendline before the lines converge. TheEURUSD Day Trading Coursecovers how to trade the forex market in 1 to 2 hours per day , trading patterns that occur over and again in the world’s largest financial market. To see the exact prices of the open, close, high, and low you can click on a candlestick and you will see all the prices listed along the top or bottom of the trading screen on most platforms. On TradingView, you see the prices along the top, and on MetaTrader you’ll see the prices along the bottom of the screen. Candlestick Chart for Beginners is a blog post for, you guessed it, helping beginners learn how to read a candlestick chart.

Any investment decision you make in your self-directed account is solely your responsibility. A head and shoulders is a reversal pattern that presents as a baseline along with three peaks, the outside peaks are close in height and the middle peak is the highest . It is important to note that the pattern is only complete if there is a close beneath the baseline. The head and shoulders pattern is considered to be one of the most reliable reversal patterns. Low time intervals like five-minute or 15-minute provide a lot of details for day traders, whereas high time intervals like one day or one week are more reliable for long-term trades. In between trading stocks and forex he consults for a number of prominent financial websites and enjoys an active lifestyle.

The candlestick colour shows whether the price falls or rises. If the price goes down, the candlestick will be black or red. The opening price is the price level where the movement started in a new period. If the price is rising, the candlestick will be green or white. If the price is going down, the candlestick will be red or black.

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