How To Read Forex Candlestick Charts
A Shortcut Publications Report
By Richard Hill
My eyes are glued to the huge screen.
The vertical red line of the last year has become flat for the last 3 weeks...
Something big is about to happen.
I quickly called my broker: "Sell my Indonesian Rupiah deposit to US Dollars."
It had been a nice little earner. I was getting 13% interest on my deposit, whilst the currency was losing value between 4-5% a year.
I was making a net 8% a year return...
Not too shabby!
I quickly called my friend: "You must sell your IDR, something big’s gonna happen."
"I’m too busy," came the reply.
Sure enough that afternoon, the Indonesian currency collapsed.
It continued to plummet from 2400 to 17000 against the US$, losing over 80% of its value.
I resisted reminding my friend of that phone call.
Now, I didn’t know much about forex charts back then, but this experience taught me, never to ignore the valuable signals they reveal.
A simple forex candlestick chart can give important clues to where the market is heading.
Fact is, you can easily learn how to see price action by reading a simple forex candlestick chart too.
For example, the candlestick chart below shows the currency pair EUR/USD (Euro versus the US Dollar). The price is on the vertical axis and the time period on the horizontal.
Each candle, green or red, represents 5 minutes of trading time.
A green candle means, during those 5 minutes, the closing price was higher than the opening price - it went up.
A red candle means the closing price was less than the opening price - it went down.
Simple, right?
The black line above and below the candle bodies are called ‘wicks’ and they show where the price moved highest or lowest for the candle period.
You can hover the mouse on any candle body, and the price information will pop up in a box. It will tell you the opening price, closing price and the highest and lowest price for the time period.
Hopefully, you can see that what might look like a complicated chart isn’t as complicated as you might have thought!
Using Candlestick Charts To
Spot Currency Trends Developing
Using a candlestick chart like this you can see the price action,
or movement of the currency pair.
On the above chart the price was 1.4100 at the bottom left hand corner and it is 1.4189 in the top right hand corner.
You can see the market has been in a clear uptrend for that time. In fact, it has gone up by 89 pips (1.4189 - 1.4100).
And if you can see that uptrend, well, let me congratulate you...
You’ve just analysed a forex chart. Easy, isn’t it?
Best of all, it’s really not difficult to learn how to spot such trends developing.
And when you learn how to see opportunities,
you can start to profit independently. The candlestick chart can show you all you need to know.
Best Wishes,
Richard Hill
Forex Round Up
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