Candlestick

Candlestick charts display price action with visual bars that show the open, high, low, and close (OHLC) prices for each time period. The body of the candle shows the range between open and close prices, while the wicks (also called shadows) extend to show the high and low extremes reached during the period. Bullish candles, where close is above open, are typically colored green or white. Bearish candles, where close is below open, are typically red or black.

Candlestick charts originated in Japan over 250 years ago for rice trading and remain the dominant charting style globally because they convey more information at a glance than line or bar charts. Each candle tells a story about the battle between buyers and sellers over its period. A long green body with small wicks shows dominant buying. A long red body with small wicks shows dominant selling. A small body with long wicks shows indecision. Over many candles, patterns form that experienced traders use to anticipate reversals and continuations.

For example, on a 4-hour chart of EUR/USD, a single candle might open at 1.0850, rise to a high of 1.0885, drop to a low of 1.0840, and close at 1.0875. The resulting green candle has a 25 pip body (1.0850 to 1.0875) and wicks extending 10 pips above and below. A series of similar strong green candles with short lower wicks signals sustained buying pressure, which traders can use to confirm an uptrend.

In copy trading, candlestick analysis is part of the technical framework informing the master strategy. SteadyFlowFX's 9 algorithms use candlestick structure to evaluate entries and exits across the 8 currency pairs. The verified Myfxbook 71.3 percent win rate includes trades informed by candlestick pattern recognition. Understanding candlesticks helps subscribers read the charts alongside the strategy's activity, even though the actual trade execution is automated.