Forex Trading signals as I discussed in my last article is of immense importance as it is a base for all different types of trading activities especially the Forex Market. In the last article of Forex Trading Signals I gave a brief introduction about candle stick charts. Today, I will introduce new terms and I will try my best to further educate the beginners to understand the basics of candlestick charts which helps to provide Forex Trading Signals.
Today, I will explain a few basic types of candlesticks and what actually they mean. There are many types of candlesticks but I will slowly introduce them in my upcoming articles starting from the basic candlesticks and moving towards the complex ones. The two basic candlesticks which I will discuss in this article are as under:Long versus ShortMarubozu
Long versus Short candlesticks depicts the degree of selling or buying pressure. The candlestick chart below is for Euro/USD currency pair for 29th June 2011 which shows the movement in the currency pair in terms of candlestick chart and the Forex Trading Signals it generated for investors.
The Long Blue candlestick shows an aggressive bullish trend which means that throughout the period of 30 minutes life of this particular candlestick there was a strong buying in Euro against the US Dollar. This gives an investor a signal that there was a strong buying through the period as the closing price was much far from the opening price creating a bullish sentiment. If there is a long advance as we can see in the first long blue candlestick, it gives an indication of strong and solid buying sentiment and creates an aggressive buying which can be seen in the chart as one long blue candlestick is followed by another long blue candlestick giving a Forex Trading Signal of excessive bullishness.
Similarly on the other side if there is a long red candlestick it gives the investor a signal of bearish trend. If there is a long decline in the candlestick it gives an indication of strong selling pressure and generates aggressive selling, giving investors Forex Trading signals of excessive bearishness.
The second type of candle stick which is very rare but can occur during a trading session is known as Marubozu Candlestick. This is one of the very rare types of candlestick occurring during the trading sessions. The uniqueness of this candlestick is that it does not have any wick. The chart below shows a typical Marubozu Candlestick.
Forex Trading Signals
In the Marubozu candlestick there are no upper or lower shadows which are the upper of the lower wicks of the candles. In a typical Maubozu candlestick the high equals the close and the low equals the opens and opposite is true for a red marubozu candle stick. The Marubozu candlestick shows that the buyer or selling depending upon what candlestick is being discussed were in total control from the opening price till the closing price that is from the first trade to the last trade in a given period of time.
I hope today’s article must have further enhanced your knowledge regarding the use of candlestick charts in Forex Market Trading and the importance of Forex Trading Signals by using candlestick charts. In my upcoming article, I will further introduce different types of candlestick and explain how they help in generating different Forex Trading Signals.