Candlestick Patterns in Forex Market
The real Body of candlestick That displays the price distance between the open and the close. This area is known as the real body or simply the body. The real body displays the opening and closing price of the security being traded. Closing prices have added significance because they determine the conviction of the bulls or bears.
UPPER SHADOW / UPPER WICK
The price distance between the open and the high for the period being analyzed is called the upper shadow, sometimes referred to as an “upper wick” as well.
LOWER SHADOW / LOWER WICK
The price distance between the close and the low for the period being analyzed is called the lower shadow, sometimes referred to as a “lower wick”.
There are multiple forms of candlestick patterns here is a brief overview of the most popular and widely used single and multi-bar patterns commonly used today.
Signals uptrend movement, they occur in different lengths; the longer the body, the more significant the price increase.
Signals downtrend movement, they occur in different lengths; the longer the body, the more significant the price decrease.
LONG LOWER SHADOW
These candles provide a bullish signal, the lower shadow must be at least the size of the real body; the longer the lower shadow the more reliable the signal.
LONG UPPER SHADOW
These candles provide a bearish signal, the upper shadow must be at least the size of the real body; the longer the upper shadow the more reliable the signal.
The hammer is a bullish signal that occurs during a downtrend. The lower shadow should be at least twice the length of the real-body. Hammers have little or no upper shadow.
When a hammer occurs during an uptrend it is known as a “hanging man” and is a bearish signal. Because of the bullish long lower shadow however, this pattern needs bearish confirmation by a close under the hanging man’s real body.
This candle has a long upper shadow with little, or no lower shadow, and a small real body near the lows of the session that develops during or after and uptrend.
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