Reading the Last Candle for Entry
For those who plunge into the world of trading, surely no stranger to charts or graphs that present price information. Regardless of the trading platform used, price movements will appear in the form of up and down charts. The historical data becomes a medium for conducting technical analysis. There are various types of charts that traders often rely on. Each has its own characteristics and advantages. One of the favorite charts of traders is the Candlestick. Candlesticks are known for their shape that resembles a candlestick. This media is commonly used to analyze the movement of stocks, forex, to commodities. However, it is not uncommon for traders to get entangled with complex patterns when trying to read them. In fact, there is a way to read candlesticks that is simpler and more accurate.
Basic How to Read Candlesticks Accurately
Assume that price dynamics occur as a result of a battle between sellers and buyers. Each element of the candle indicates which side has the upper hand, who has lost, who is in control, and which side has the best chance of winning the next battle.
Then, how to read candlesticks more simply and accurately. Perform analysis on the following four elements:
Open Price (Open Price)
Open represents the first price traded in a given time frame, indicated by the upper or lower part of the body. If the price is trending up then the candlestick will be green, and if the price is down it will show a red candlestick.
Highest Price (Highest Price)
At the highest price will be indicated by the top of the tail that occurs above the body, which is called the upper tail. If the open was the highest price during the time frame there would be no up tail.
Lowest Price (Lowest Price)
The low indicates the lowest price traded during a given time frame, indicated by the bottom of the tail occurring below the body, which is called the tail lower. If the open price is the lowest price, then there will be no lower tail.
Latest Price (Close/current Price)
The close price is the last price or the latest price traded on a certain time frame. Certain patterns will appear when we read candlesticks (doji, marubozu, spinning tops, etc.). These candlestick patterns are actually formed from a "battle" between buyers and sellers, where the close price indicates the last condition compared to the open price, from which the body of the candlestick is formed. While the high and low prices form a shadow on the candlestick. Here, the length of the shadow determines how strongly one party tries to push the price. If the lower shadow is long, it means that the seller is trying hard to drop the price. On the other hand, if the upper shadow is long, it means that buyers are trying to raise prices.
Well, from the length of the shadow, traders can compare it with the body to find out how strong one party is against the other. For example, in a pin bar setup, generally the price action setup is used to indicate the continuity or reversal of a trend.
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