A candlestick chart is a chart that tracks the price range of a currency pair using a combination line and bar chart. A candlestick chart records the open, high, low and close for each specified time period. The chart is made up of figures that are referred to as candlesticks. The line, called the shadow, records the range, while the thicker bar records the open and close. If the close is below the open, the candlestick body is filled in (black). If the close is above the open, the body is not filled (white).
Candlesticks are very useful for visualizing patterns in price action hour to hour, day to day and so on. Candlestick charts are used by traders for simple trend identification as well as more complex price patterns. For example, a succession of white candles indicates consistently higher closes, meaning an uptrend. Candlestick charts were originally a Japanese form of charting used for trading rice futures, but have proved to be very useful for forex trading as well.
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