These patterns are widely used amongst traders. The bar represents a little vertical line with two little horizontal stripes. The upper point of the bar is a maximum price and the lower point is a minimum price for the hour. In turn, a little stripe to the left of the bar marks the hour’s opening price and a little stripe to the right of the bar marks the hour’s closing price. Apart from the hourly bar there are minutes, 6 hour, daily and weekly bars.
In fact, Japanese candles are almost the same as the bars but more visual. Instead of two little stripes, it has a rectangular shape which angles mark opening and closing prices. If the closing price is above the opening price, then body of the candle is filled in white color; if it is below it, then it is filled in black color; if the prices are at the same level, then the rectangle turns into a little horizontal line. The so-called “wick” represents a straight line drawn from the hour’s high to its low through the center of the rectangle.
– A white candle in itself is a sign of rising prices. The longer the candle and its extension are then the stronger the trend will be. The black candle is a sign of declining prices.
– A long “wick” is a sign that the price tried but failed to go in the direction where the “wick” is drawn. That’s why if the “wick” is longer than a candlestick then we can suppose that the price is going down. The longer the “wick” is then the higher the probability that this will happen.
– A “hammer” and “inverted hammer”. The pattern is similar to the previous one – a long “handle” or “wick” and a very small body. “Hammer” is a signal of an uptrend and “inverted hammer” is a signal of a downtrend.
– “spinning top” and
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