Forex Candlesticks Basics

One of the techniques you can apply in order to analyze market prices and signals is through the implementation of candlesticks. These represent a charting technique developed and widely used in Japan. Their major purpose was the prediction the prices of rice, which constituted one of the first futures market in the world. Even though candlesticks were used for many years in Japan, its advantages have been recognized in Europe and the US in recent years.

Candlesticks are widely used in the forex market. Thus, if you want to increase your chances for success on this market you should be well aware of candlestick basics.

The basic components of a candlestick bar are the open, high, low and close of a currency pair. Being similar to a bar chart, it includes a colored rectangular portion, called the body. A thin vertical line is situated immediately above and/or below it, which is referred to as the wick or shadow.

The difference between the opening and closing price is presented by the body. The color depends on whether it is a downward or upward movement of the price. Generally, if the closing price is higher than the opening price, then the body will be colored in white. On the other hand, if the price has closed at a lower level, then the body will be colored in black.

The high and low price extremes of the period under consideration are shown by the wicks.

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