The Best Candlesticks Give Hints

The term candlestick chart is used by many traders to show prices. Because visually the candlestick chart is easy to understand and the information presented in each candlestick is quite complete, including the opening price, lowest price, highest price, and closing price. Reading candlesticks is not just memorizing and knowing the formations. Many books reference hundreds of candlestick patterns, with each pattern having the information and description to know what will happen next in the forex market.

In fact, memorizing hundreds of candlestick patterns does not make a significant difference to a trader's trading performance. Actually, traders do not need to memorize all the patterns for candlestick analysis. Traders only need to know the big picture of how to read candlesticks, because each candle is basically capable of informing the price structure, trend strength, buyer versus seller dynamics, and the projected direction the price will move in the future.

Candle Structure Formed

Candlestick characters are the simplest and most accurate indicators that traders can use to make transactions easier. It is important for traders to read in detail the characteristics of candlesticks so that they can understand the messages and information contained in each candle movement itself. Candlesticks are known for their shape that resembles a candlestick. The characteristics of this candle will greatly support reading accurate market opportunities. Reading candlesticks is not arbitrary, just memorizing and getting to know the formations. Traders need to know the big picture how to read candlesticks, because each candle is able to inform the price structure, the strength of the dynamic trend of buyers versus sellers, and the projected direction the price will move in the future. The way to read the characteristics of a candlestick is by body size, wick length, body ratio, and position.

Pay Attention to Key Level

These key levels will accelerate price movements and increase volatility when prices touch these levels. Since the extremes of the bars on the daily timeframe create certain key levels it makes sense to draw a chart right along the highs and lows of the price. Usually the key levels on the chart are identified by support and resistance lines, which act as price barriers when they reach an upper or lower limit. A support level is a price line where the market is having a hard time breaking below, which signals that buyers may rejoin the market if the price falls to a major support level. Resistance levels are very similar to support levels, only that they form upwards and signal price levels at which the market is having a hard time breaking above. When the price reaches a key resistance level, sellers can immediately enter the market and help send the price further lower.

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