Want to elevate your trading game? Learn how to read candlesticks charts! This powerful blog can help you make better trading decisions by providing insights into market trends and price movements. You can interpret the patterns and signals like a pro with a little practice.
In this post, we will learn how to read a candlestick chart. If you don’t have little bit knowledge about chart reading, maybe you will not become a pro trader because candlesticks play a main role in technical analysis, market observation, and finding overall trends. The candlesticks discovered in 1700 by a Japanese man known as Homma. The candlesticks are linked to the price and the supply and demand of rice.
If we talk about daily candlestick formation every candlestick has its own story in the market. Its representation of a security price is high, low, open and closed for the day. With the help of this traders can predict the next price level movement according to the last candlestick formation.
With the help of candlesticks, we can make our study very easy, because we can make our strategy on behalf of a chart. Candlesticks are the backbone of every trader, On behalf of the chart pattern you can combine candles for clean and better results.
How bullish the candle performed
The Bullish candles represent the overall buying movement in the market. If we talk about the body size of a bullish candle, we don’t have a perfect answer because a bullish candle can be a long bull bar or a small bull bar. The Bullish candles start from the bottom and close above the open price.
In this momentum, the total market is in control of buyers. The buyers are riding the market on the bull side. The bullish candle has a wide or rectangle part that’s called real body which shows the correlation between open and close price.
The real body tells a story to us about the price of the day and the price range on the last day. What are the highs and lows of the last day? If the real body is filled with green colour its mean close is higher than open and it’s known bullish candle. That shows buyers push the price upside and close higher than the opening price.
if on the chart, any bull candle is performed and breaks the last candle high even last candle is red. It’s showing us the overall control of buyers and they are pushing the market on the upside. With the help of candlesticks, we can easily recognize the chart patterns.
How Bearish Candle Perform
The bearish candle represents the bearish momentum of the market. After a long bull run a healthy red candle is forming on the market. You must pay attention at that time. Because you have the opportunity to enter the trade on the bearish side.
Let me tell, you how the bearish candle performs on the market. The bearish candle has a long rectangular body with a small shadow. That represents in this interval the seller on power and pushing the market to the downside. The bearish candle body tells us a whole story about the price of the day and the price range of the last day.
If the bear pushes the market downside and performs bearish candles, then you can predict the market can go downside. Every candle has an upper and lower side shadow that represents the price reach on those levels during the live session of the market.
In my view, every trader should consider the body of the candles for measuring the strength buyer or seller. If a candle does not healthy body it has a long tail you can predict there is no power between buyer and seller. Traders must consider only healthy candles.
Can we take the trade on behalf of bullish and bearish candlesticks?
It’s a good question and I’m happy to tell you the answer to this question. Suppose you are trading naked on bullish and bearish candlesticks. Then it’s not a good deal because on trading naked on a single candle, we can’t recognize the trend very well and also not predict the momentum on the chart. Single green or red candlesticks could not give a direction to traders. If you were looking or analyzing a bunch of candlesticks, you can take the trend on candlesticks.
With the help of a single candle, you can observe the overall momentum or strength of the buyer or seller. Sometimes a candle tells us a different story. The market performed a bullish candle and immediately after market performed a bearish candle because this happened by trend. So traders should wait for a clear trend to take trade on it.
Taking trade on single candles is a critical condition for every trader if any trader takes trade on a single candle it means the trader is doing trade blandly. So every trader should wait for perfect for perfect confirmation. Candlestick has a clear story to tell traders.
Candlesticks help to measure the strength of the market
If you have proper knowledge about candlesticks then you easily measure the strength of the market. Because candlesticks tell you the overall story of the market. In the market, buyers are in control and on the chart bullish candlesticks are forming consequently then you easily determine market is in a bull mood and it will rise more.
If in the market the game is controlled by the hands of the seller and the market is forming bearish candles regularly. Each candle is larger than the prior candle, so you can easily forecast that the market will go down. The characters or candlesticks tell you everything.
Many traders are trading on behalf of candlesticks. Because they know about naked candlesticks they can easily earn money. The technical analysis depends on the candlesticks, it’s done by a trader on a bunch of candlesticks. In the candlesticks many chart patterns are formed they make trading easy for traders.
If you are new to the market for trading purposes, you should learn the lesson of the candlestick. Because candlesticks play a very important role in the market. With the help of a candlesticks chart pattern, we can predict the market movement, use indicators, and clean technical analysis.