What are forex candlestick charts?
A forex candlestick chart contains price bars that conveys the high, low, open, and close price for a given forex currency pair over the period of time that one candlestick represents, (1hr, 4hr, daily, weekly, etc.). However, forex candlesticks differ dramatically from standard bar charts even though they both present the same data. A forex candlestick provides a large advantage for traders because it contains a unique visual dimension that enables traders to very easily spot the “force” of price movement that each time period contained. To learn more about the anatomy of a candlestick click here: forex candlesticks tutorial
What are forex Japanese candlestick charts?
A forex candlestick chart is a visual display of many individual candlesticks that make up the price movement across a period of time for the particular currency pair being analyzed. The dramatic visual contrast from one forex candlestick to the next enables traders to spot repetitive price action setups in a dramatically easier and more enjoyable manner than using standard bar charts or line charts.
As an example of how much more visually appealing forex candlestick charts are over standard bar charts, consider the following examples
GBPUSD 4hr candlestick chart ——— Compared To ——– GBPUSD 4hr bar chart:
GBPUSD 4hr line chart:
From the example above a few things should “jump” out at you about forex candlestick charts. First off, do you notice how all the bars with a higher close than the previous bar are the same color (blue), and all the bars with a lower close than the previous bar are the same color (red)? The very fact that there is a dramatic color difference between bullish and bearish bars makes spotting forex candlestick patterns much easier than using a standard bar chart of bars that are the same color. Even if one does alternate the color of the bars on a standard bar chart like this, the difference will not be nearly as dramatic or defined because there is no “real body” or body, this the colored area that signifies the distance between the open and close on a candlestick. To learn more about the anatomy of a candlestick click here: forex candlesticks tutorial
The next thing you should notice about the example charts above is that the various price action setups that I teach are much easier to spot and thus take advantage of on a forex candlestick chart. Notice how the pin bar setups, the fakey setup, and the inside bar setup all are much easier to spot on the candlestick chart compared to the bar chart. Also, when you look at a candlestick chart and bar chart side by side like this it is quite obvious that bar charts are just plain boring to look at and don’t hold your interest as long as a colorful and dynamic forex candlesticks chart will. The example of the line chart was just thrown in to show you that line charts are not very good tools for price action traders, they only show one piece of data (open, close, high OR low) instead of the 4 pieces of data that a candlestick or bar chart shows, line charts can be good tools for trend identification, however they mainly are used for purposes in fields outside of financial market speculation. Enough said on line charts.
How are forex candlestick charts used?
There are many books and websites dedicated to teaching traders a myriad of different candlestick patterns, however, many of these patterns are simply alternate versions of basically the same trading setup. This is why I trade the forex market with only a few core candlestick forex price action trading strategies that I feel do an excellent job at providing me with a profitable forex trading strategy that doesn’t require that I memorize a hundred different candlestick patterns.
Trading with forex candlestick patterns can be a very simple and effective way to analyze and trade the forex market. However, the value of this simplicity can be taken away very quickly when traders over-lay numerous lagging indicators on their charts, essentially hiding the power of the candlesticks beneath.
This is why I teach traders to trade off a simple stripped-down, or indicator-free, forex price chart, outside of a couple moving averages which can be useful in identifying dynamic support and resistance areas. My price action setups; pin bars, fakey’s, and inside bars, are really all a trader needs as far as technical strategies are concerned to accurately analyze and trade a forex price chart. I have been using candlestick charts since I began trading because they make my price action signals much easier to spot and more fun to trade than straining your eyes trying to spot the same setups on a bar chart.
Where can I find out more about forex candlestick charts and price action?
If you would like to learn a very clean, effective, and common sense way to trade the forex market with candlestick charts and my proprietary take on price action setups, you might want to check out my forex price action educational material. I truly feel that the visually superiority of forex candlestick charts combined with the power and simplicity that my price action trading strategies contain, can be a big help to your forex trading career. You really don’t have to take my word for it though, check out some of my free forex videos, forex strategies, or follow my free daily forex trading commentary if you would like to see for yourself just how powerful forex candlestick charts combined with my price action setups can be. Also, if you want a more in-depth and systematic educational experience, check out my forex trading course which contains access to my newly redesigned member’s trading forum, member’s daily commentary, and email support from me.
Take care and good trading – Nial Fuller
CHRISTMAS SPECIAL: During December I’m Offering A Special Discount On Life-Time Membership To My Forex Trading Courses, Daily Trade Setups Newsletter, Live Trading Forum & Email Support – For More Info Click Here.