Candlesticks have a formation that displays the open, high, low and closing price of a currency, stock or commodity over a duration. You can typically choose the time frame that you want to show.

Day traders generally choose 5 minutes though 15 minutes can be your option for certain cases. Longer periods may be chosen for longer term trades.

The difference between open and close points are marked by the candle body. If it?s a white or blue / green on charts with color, the lower body is the open and while you were considering it, the value marked up. Should it be black or red in charts with color, the top extent indicates the opening value and during that period, the price moved down.

In candles, vertical lines pointing up from the top and down from the bottom are called wicks. The highest price ever obtained during the period is the top of the upper wick section. On the other hand, the lowest value is the bottom of the lower wick part.

The boon of this kind of analysis is that the trader can straight off see whether prices rose or fell over the period. A white or green candle manifests a rising price or bearish tendency and a black or red candle signifies a dropping price or bullish tendency.

The connection of open and close values to high and low values can be noted spontaneously. Then there is a solid candle without a wick.

The name for this is Marubozu pattern. This means that the opening and closing prices were never reached in either direction by the low and high prices.

The opening was the high price & the closing was the reduced price if the candle was red or black. The low price is the open and the close is the high price when the candle is green or white.

A relatively uniform upward or downward trend is defined by a long body. A reversal is designated by a long wick on the top or on the bottom.

For accurate trend identification a candlestick needs to be examined in conjunction with the others that preceded it. Then you can devise more complex candlestick patterns signifying the anticipated trends to come.

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1. The method of analysis that concerns itself with assessing the nature and the ramifications of socio-economic and political undercurrents on the FX market is called FUNDAMENTAL ANALYSIS.

2. Technical analysis uses charts to pinpoint trends and patterns in the change of prices.

Choosing one over the other is not obvious. A cursory erxamination of FX trading related forums and websites show traders being staunch advocates of either one of these approaches. Those who choose technical analysis assert that graphs are the exclusive approach that can predict way ahead of time the trends which is decisive to making a profit in trading.

On the other hand, the fundamental analysts will affirm that currency prices are actuated by socio-economic factors, a fact that cannot be opposed. Thus according to them, chart patterns are mere eventualities that have no real consequence on reality.

But rationally this does not necessarily occur. Even though economic changes have a mammoth effect on the currency markets, it may still be possible to determine patterns in the way that the markets react after a notification or in times when there are no major news.

But if you place all your belief in technical analysis, quick announcements in crucial financial news will perhaps catch you off guard. Since you would be relying on charts and not news, you may end up picking the inferior time to trade. Such a contingency could be calamitous.

In the end, it is an undeniable fact that economic attributes are behind most, if not all of the chief price movements but it cannot be renounced that there are trends that can be predicted by technical analysis for the shorter periods. So picking up these trends while being aware and up to date on current events is the most definite way to envisage direction of future currency market values. Precise prediction is of course how one makes a profit on the FX market.

If we correlate the forex market to an elastic object, it can go in either direction and at times, return to the original spot. Fundamentals alter the market. The magnitute of the movement and its return point is estimated by technical analysis.

Therefore you would be well advised not to be a idealist in either form of analysis. Formidable returns are realized better when fundamental and technical analysis are made use of together.

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