Candlestick is formed by the opening price, highest, lowest and closing prices: If the price is above the closing price of opening, see the hollow or green candles. If the closing price below the cost of opening, see the full red candles. Thin lines are peering above and below the body display the highest and the lowest price, and they are called shadows: on top of the upper shadow is the highest, and on the bottom is the lowest price. Long bodies indicate strong trend of buying or selling. What is the larger body, the greater the intensity of the pressure to buy or sell. Short body poorly run buy or sell. Candles that have long shadows, and short bodies are called spinning tops. Pattern indicates indecision between buyers and sellers. In forex dictionary, bull means the buyer, a bear means the seller. It is needed to know the following names: Depending on whether the candle body is filled or hollow, the highest and lowest prices are in line with the prices of opening and closing Doji candlestick has the same price or opening and closing the body seamlessly short. Hammer is bullish reversal (bullish reversal pattern) formed during the drop-down trend. So called because the market is symbolically a chance to knock on the bottom. Hanging Man is a bear reversal (bearish reversal pattern), which may also indicate the top or strong resistance. Inverted hammer occurs when the price is falling suggests the possibility to invert Shooting star is a bear reversal that looks identical inverted hammer, but the occurs when price growth. Japanese candles have different sizes length. Long bodies indicate strong buying or selling. What is the body longer, the greater the intensity of buying or selling pressure. Short body suggest that it is a very small purchasing or selling activities. The higher the green candle, close price is far above the opening price. This shows that the price increased substantially from opening to closing, and that the buyers were aggressive. In other words, the bulls ”tearing” bears and it is strong! Long filled red candles show strong pressure to sell. The longer the red candle, close price is far below the cost of opening. This shows that the price way down from the opening, and that the sellers were aggressive. In other words, the bears have caught the bulls by the horns and banging with them as they like.
Mysterious shadows Candlestick
The upper and lower shadows the candle gives important information about the trade. The upper shadow indicates the culmination of trading, and the lower the lowest price trading. Candles with long shadows show that trading evolved strongly above or below the price of opening and closing. Candles with short shadows indicate that most of the trading took place near the price of opening and closing. If the candle has a long upper shadow and a short lower, this means that customers exercise muscles and offer higher prices, but for various reasons, vendors have entered and dragged the price back down to the end of the candle, at the opening price. If the candle has a long lower, a short upper shadow, it means that the sellers to wash territory and to force lower prices, but for various reasons, customers came and drove prices back to the end of a candle at the opening price. The candle with a long upper and lower shadows and small body, called the spinning top. Body color is not important. Formed form shows indecision between buyers and sellers. A little body filled shows little movement from opening to closing and the shadows in this case lead to a fight between buyers and sellers, but nobody wins. The result is a draw. Although the candle opened and closed with little change, prices, meanwhile, ranged considerably in both directions. If a spinning top forms during an uptrend, this usually means that there is still a lot of customers.
Marubozu still means something else – no shadows on fresh. Depending on whether the candle body is filled or hollow, the highest and lowest prices are the same prices you open or close. If you look at the image below, you will see two types of Marubozu: Green Marubozu contains a long green body with no shadows. Opening price is equal to the lowest price, and the price of closing corresponds to the highest price. This is a strong bullish candle which shows that customers control the trade. Usually indicates a bullish trend or reversal (bullish reversal pattern). Red Marubozu contains a long red body with no shadows. Opening price is the highest, and the closing price is the lowest price. It is a strong a bare candle, which indicates that sellers controlled the price for the entire period. Usually involves a bear continuation or reversal of a bear.
Doji candles have the same price of opening and closing, or their bodies were very short. Doji should have a very small body that appears as a thin line. Doji suggest indecision or the struggle for position between buyers and sellers. Price ranges above and below the open price during the period, but closes near the opening price. Neither buyers nor sellers are not able to establish control and the result is – remains unresolved. If Doji formed after a series of candles with long body green marubozu, it is a signal that buyers are becoming exhausted and weak. In order to price continues to elevators, it is necessary to more customers, but no more! Sellers are getting ready to pull prices back down. Note that even after they form a Doji, that does not mean automatically and direction changes of currency. Confirmation is still required. Wait until a bearish candle closes below the price at which the long green candle open. If Doji formed after a series of candles with long filled the body as red marubozu. It is signals the Doji that sellers are becoming exhausted and weak. To price continued to fall, it is necessary to more vendors, but they all came out! Customers are now preparing for an opportunity to enter long as it’s cheap. Although the price decline ends due to lack of new sellers, required strong buying as confirmation of the reversal. Wait closure green candles above the opening price of the long red candle. To shape could qualify as a turn, there must be a previous trend that will reverse. Bullish reversal pattern (bullish reversal) requires the prior decline, while bearish reversal (bear-reversal) requires the previous upward trend. The direction of the trend can be determined by the trend lines, moving average (moving average), or other aspects of technical analysis.
Hammer and Hanging Man Candlestick
Both have small bodies (red or green), long lower shadows and short or no upper shadow. Hammer is a bullish reversal that forms during a downtrend. It looks as if the market a chance to knock the bottom. When prices fall, hammer gives a signal that is close to the bottom and will start again raise prices. The long lower shadow indicates that sellers pushed prices lower, but buyers are managed to overcome this selling pressure and closed the price near the opening price. Because you see a hammer, it does not mean you should automatically place an order to purchase! It takes more bull confirma tion before it is safe to trade.
Good confirmation would be if the green candle closes above the opening price of the candle on the left hammer.
Criteria for recognition:
Hanging Man is a bear reversal which may also indicate the top or strong resistance level. When the price rises, forming a hanging man shows that sellers began numerically exceed the customers. The long lower shadow indicates that sellers pushed prices lower. Customers were able to return price, but only near the opening price. It tells us that there is a lot of customers who can provide the necessary torque to raise prices.
Criteria for identification:
The long lower shadow first, which is about two or three times longer than the body
Small upper shadow or nonexistent
A body is at the top of the trading range
Body color is not important, although the red body more bear than green body. Inverted hammer occurs when price falls, suggesting the possibility of a reversal. The long upper shadow shows that buyers tried to raise prices. However, sellers have seen what customers are doing, and have tried to push the price back down. Fortunately, customers are strong enough and managed to close the session near the opening price. Since the sellers were not able to close the lower price, this is a good indication that anyone who wants to sell, but sold. And if there are no more sellers – who is left? Customers! Shooting star is a bear reversal that looks identical to the inverted hammer but occurs when the price rises. Its shape indicates that the price opened at the bottom, let loose, but returned back to the bottom. This means that customers are trying to push the price up, but sellers came and overcame them. This is a clear sign of a bear because there are no more customers, since they were all killed them.