Candlestick Chart

What is a Candlestick Chart in CFDs Trading?

A candlestick chart (or forex candlestick chart) is a visual way to show how prices move over time. Each "candlestick" represents a chosen time period, like 1 minute, 1 hour, or 1 day, and displays four crucial pieces of information:

• Open: the price when that period started
• Close: the price when it ended
• High: the highest price during that period
• Low: the lowest price during that period

The thick part, called the body, shows whether the price went up (often a green or empty candle) or down (often red or filled) during that time. Thin lines above and below, called wicks or shadows, show the full range of price movement.

How to read a candlestick chart?

1. Look at the body
   1. If the close is above the open, the body is typically green or hollow: price went up (Bullish candle).
   2. If the close is below the open, the body is red or filled: price went down (Bearish candle).
2. Check the wicks
   1. The upper wick shows how high prices went during the specific candles timeframe.
   2. The lower wick shows how low prices dropped for the specific candles timeframe.
3. See what it tells you
   1. A short body with long wicks can mean market indecision (often forming a "doji"). A long body with small wicks suggests strong strength in the direction, up or down.

Understanding candlestick chart patterns

Candlesticks often form patterns that help traders guess what might happen next. Some common patterns include:

• Doji: tells you buyers and sellers are balanced; often signals a pause or reversal in trend.
• Morning Star: a hopeful sign after a price drop; suggests buyers are taking over.
• Three White Soldiers: three strong upward candles, showing a possible shift from a downtrend to an uptrend.

These signals work best when confirmed with other tools or indicators.

Why use a candlestick chart in trading?

• Easy to read at a glance: visually shows price movement and sentiment.
• Helps you make sense of the market: candles show trends, reversals, momentum, and indecision.
• Works for forex and beyond: useful across stocks, futures, commodities, and currencies.
• Gentle on beginners: visually intuitive, and gradually makes you familiar with deeper trading tools.