A beginner's guide to trading - Chapter 1
Candlesticks? Oh come on, even babies know about it. What is new in it to learn? This is what everybody thinks when they hear about the term “candlesticks” in trading. Let me ask you one question. If you know everything about it, then why you are still making losses? Sounds logical, right? So everybody is a beginner here. Join me with open mind and you will learn new things in this series.
Bull candle – Close is above open with strong body. It shows bullish strength. It is also known as momentum candle if it is big. And it has very small upper, lower wicks or no wicks.
A candle plays the role according to where it is forming, what happened before the candle and what happened after that.
Example 1
In the chart below, after downtrend, price consolidated and then it gave upside breakout. So here it is acting as momentum candle.
Example 2
In the chart below, price is in the uptrend, then it consolidated and then it continued upside movement.
Example 3
In the chart below, in the uptrend, the price gave a final strong bull candle before it started to fall. In this scenario, bulls are getting exhausted after the bull candle formation and bears have started to gain strength.
One strong bull candle has played different roles like break out candle, momentum continuation candle and exhaustion candle. It is giving the clue about the trend when you combine the knowledge about where is it forming, why it is forming and what strength it has.
So observe, analyse, understand and trade. All the best...
Bull candle – Close is above open with strong body. It shows bullish strength. It is also known as momentum candle if it is big. And it has very small upper, lower wicks or no wicks.
A candle plays the role according to where it is forming, what happened before the candle and what happened after that.
Example 1
In the chart below, after downtrend, price consolidated and then it gave upside breakout. So here it is acting as momentum candle.
Example 2
In the chart below, price is in the uptrend, then it consolidated and then it continued upside movement.
Example 3
In the chart below, in the uptrend, the price gave a final strong bull candle before it started to fall. In this scenario, bulls are getting exhausted after the bull candle formation and bears have started to gain strength.
One strong bull candle has played different roles like break out candle, momentum continuation candle and exhaustion candle. It is giving the clue about the trend when you combine the knowledge about where is it forming, why it is forming and what strength it has.
So observe, analyse, understand and trade. All the best...
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