Else, the things will become confusing during forex chat analysis.

To get you started, I am sharing with you top 3 forex candlestick patterns that you must always be aware of -

1. Forex Candlestick Doji - Definitely “a must” to know. When analysing charts which are 1 hr based or above, then a doji candlesticks pattern holds a prominent importance.

2. Candlestick Engulfing Pattern - Bearish or bullish engulfing, both display significant reversal charactersticks. Whenever spotted on a daily chart or even a 1 hr chart, it indicates that market is about to reverse. They are pretty reliable forex patterns

3. Morning or Evening Stars fomation - Like engulfing patterns, these forex candlestick formations are also indication of that market is about to reverse. However, these patterns are not too frequent. But whenever spotted, they are quite reliable.

Along with this there are certain important points related to candlesticks that you must be aware of. These points I have shared in my free forex report.

You can get free access to that report by joining my mailing list at - Learn Forex Candlesticks

Most forex traders just stop at identifying if the candlestick is bullish and bearish and if the trend is continuing, where as candlesticks can be used not only to enter the trades, but also to accurately place the stop loss.

However, forex candlestick cannot be used in isolation. Let me be clear about this. If a candletick is bearish, this analysis alone cannot be used to decide if a trade should be placed or if it should be closed. To make such decisions, there is another indicator necessary such Trend lines.

If the candlestick hits a trend line, it is at this point a clear cut analysis and so forex trading decisions can be made. For example, if during an uptrend, the currency pair forms a doji on the resistance line, that is a clear cut indication that the market may reverse.

And then this analysis can be used to make calculated decisions if the trade should be closed or if a short position should be opened.

If you would liketo receive a free forex trading strategy which is candlestick based, then enter your name and email address on the form above.

Thats all in this short post on candlesticks.

The most common candlestick patterns such as doji, spinning tops, hammer etc are found in charts of all form of markets.

So once you learn the forex candlestick, you are well equipped to use that information in other markets also.  

And the good this forex tecnical indicator is that they are highly accurate. You can come across folks who just use candlestick to enter and exit the trades.

If you are looking for a free forex trading strategy that is based on candlesticks, here is what I suggest -

Just enter your email and name in the box above and I’ll immediately send you a manual that includes this forex trading strategy.

So go ahead and enter your name and email id in the box and receive a free trading strategy that uses Forex Candlesticks.

As soon as a doji was seen, quite a few traders closed their position the next day. This resulted in a good sized bearish candlestick the following day.

But, personally I feel that there is still enough strength remining in the market as the trend was very strong. so, even though forex doji was visible which was followed by a bearish red candle, I feel that the market will get good support at 38% or may be 50% retracement level and will rebound from there.

When you are using candlesticks, you must also see what are the other indicators pointing. Do they complement the candlestick or do they still represent good strength or continuation of the chart trend.

But, nevertheless, this certainly proves how strong a doji candlestick pattern is and how accurate are the forex candlesticks.

But hanging man doesn’t has any upper wick and also it is seen only during uptrends where it means that the steam of the forex bullish run is over and the bearish run is about to start.

Where as a doji can be seen in both uptrend as well as downtrend.

As you can see in the image, how after the hanging man, the market reversed leaving all the buyers hanging.

Thats  how this candlestick pattern got its name.

So, needless to say, this is one of the very important patterns that is extremely reliable.

Thats all in this post on forex candlesticks

But not all forex charts carry such significant of doji. In some cases, this pattern would mean nothing at all.

Which charts are these?

Well any forex chart which is on day trading time frame such as 15 min., 5 min., may be even 30 min. would not carry so much significance of forex candlestick doji.

But, on the other hand presence on 1 hr chart and daily chart can cause flutters among traders and they may start adjusting their stop losses or may even choose to close the trades.

So, always watch for doji on daily, 8 hr or 1 hr forex chart. But on day trading time frames, feel free to ignore candlestics Doji.

A spinning top is almost same except that the size of the body is few pips. The body size is still very  small, but it is bigger than forex candlesticks doji.

Look at the chart below

As you can see, the spinning top shows that a significant trend  may come to an end since there is a indecision in the market. But just like candlestick doji, the volatility in the market is known from the size of wicks. If the volatility is high, the wicksize is large.

So, needless to say, both spinning top and doji are important forex candlestick patterns

For example, let us talk about Candlestick doji which is a very popular and significant type of candlestick pattern.

Doji Candlestick pattern

 As you can see in the chart, Doji signifies a point where both Buyers and sellers match for each other. Its more like a tug of war where no side is winning currently.

Candlestick Doji in clear terms is a candle where the opening price is the same or almost the same as the closing price.

So naturally when a candlestick is formed, it shows that trader needs to be watchful of the trading consitions.

Doji candlestick also shows that the traders who have their forex trades open need to do some housekeeping work such as adjusting stop loss or may be even close the trade.

See, all this message can be derived from one single forex candlestick Doji pattern

Since the introduction of japanese candlesticks to western world by steve nison, the candlesticks have gained a lot of following in trading community.

In simple terms, a forex candlestick indicates the price movement during a particular period. So on a daily chart for example, one candle will indicate the price information of one day.

Here is what a candle tells -

1. Opening Price in the duration

2. Closing price

3. Lowest price and

4. Highest price.

The difference between the open and close is the body of the candle. While the ends are known as wick.