How To Interpret Candlestick Charts

A simple forex candlestick chart can give important clues to where the market is heading.

You can easily learn how to see price action by reading and interpreting 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.

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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.