Candlestick reading in ForEx

Candlesticks are composed of the body (blue or red), an upper and a lower shadow wick. The wick illustrates the highest and lowest traded prices of a stock, and the body the opening and closing trades.






There are 14 pattern of candlesticks:

1. Blue candlestick - signals uptrend movement (those occur in different lengths; the longer the body, the more significant the price increase)
2. Red candlestick - signals downtrend movement (those occur in different lengths; the longer the body, the more significant the price decrease)
3. Long lower shadow - bullish signal (the lower wick must be at least the body's size; the longer the lower wick, the more reliable the signal)
4. Long upper shadow - bearish signal (the upper wick must be at least the body's size; the longer the upper wick, the more reliable the signal)
5. Hammer - a bullish pattern during a downtrend (long lower wick and small or no body); Shaven head - a bullish pattern during a downtrend & a bearish pattern during an uptrend (no upper wick); Hanging man - bearish pattern during an uptrend (long lower wick, small or no body; wick has the multiple length of the body.
6. Inverted hammer - signals bottom reversal, however confirmation must be obtained from next trade (may be either a blue or red body); Shaven bottom - signaling bottom reversal, however confirmation must be obtained from next trade (no lower wick); Shooting star - a bearish pattern during an uptrend (small body, long upper wick, small or no lower wick)
7. Spinning top blue - neutral pattern, meaningful in combination with other candlestick patterns
8. Spinning top red - neutral pattern, meaningful in combination with other candlestick patterns
9. Doji - neutral pattern, meaningful in combination with other candlestick patterns
10. Long legged doji - signals a top reversal
11. Dragonfly doji - signals trend reversal (no upper wick, long lower wick)
12. Gravestone doji - signals trend reversal (no lower wick, long upper wick)
13. Marubozu blue - dominant bullish trades, continued bullish trend (no upper, no lower wick)
14. Marubozu red - dominant bearish trades, continued bearish trend (no upper, no lower wick)