Reading candlestick charts forex

Reading forex candlestick chart is one aspect of forex trade which all traders have to be familiar with. In forex trade, candlestick charts are very prominent and helpful. Their bodies are generally determined by the opening and closing prices in the market. Multiple candles can be used to develop a lot of patterns which are useful in trading.

While trading in the forex market, there is nothing as important as a forex trader’s price chart. This is because the price perception ultimately assists the trader’s choice in terms of trends, determines their entries into the market and many more. 

Candlestick bar differs generally from a traditional bar charts and the renko charts which you may likely come across while trading in the market. By learning the act of reading forex candlestick charts, the traders are able to quickly identity different types of price action that they naturally cannot do before while studying other types of charts. 


In a candlestick, there are three specific points i.e the open, close and the wicks as shown in the image below. 
These points are used in the creation of a price candle. In reading candlestick forex charts, the very first point to consider are the opening and closing prices. They assist the trader in knowing where the price opened and closed in a selected period before constructing the body of the candle. For example, when you are reading the daily charts, these points will signify the daily open and close price for the day. 

In reading candlestick forex charts, you also need to take note of the colour of the candle. While red is used for a down in price, blue is used to represent an up. This techniques will assist the trader in identifying the market trend in the selected time frame. 

The next item to concentrate on while reading forex candlestick charts is the wick. These are also referred to as the candles shadow. These points shows the trader the extremes in price for a specific charting period. Since the wicks are usually thinner than the body of the candlestick, they are easily identified. They also show the strength of the candlesticks. When the traders are able to read the forex candlestick charts well, they can easily keep their eyes on the market momentum and away from the static of price extremes. 


A very good understanding of the candlesticks will enable the traders to understand the basics and also have the ability to open up an array of trading opportunities. They are mostly used by forex professionals to gauge the market sentiment and market direction. The best way to master the art and act of reading candlestick forex charts is to always review patterns as this will assist you in understanding the trend in the market. 

The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.

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