What is a Candlestick Chart?
A candlestick chart is a technical tool for forex analysis that consists of individual candles on a chart, which indicates price action. Candlestick price action requires forex traders to identify the place where the price opened for a period, where the price closed for a period, and to pinpoint the price highs and lows for a specific period.
A price action analysis is useful as it can give traders an insight into trends and reversals.
For example, groups of candlesticks can form patterns throughout forex charts and diagrams that could indicate reversals or continuation of trends. Candlesticks can also form individual formations, which could indicate buy or sell entries in the market.
The period of each candle typically depends on the time frame chosen by the trader. The most popular time frame is the daily one, where the candle indicates the open, close, and high and low for one single day.
Grab your candlestick patterns cheat sheet.
While you're still familiarising yourself with candlestick patterns, it can be helpful to have a quick reference. Our cheat sheet outlines the most common patterns, categorised by the number of bars and market sentiment - bullish, neutral or bearish.
