If you are a trader — or want to become one — you should know how important candlestick patterns really are. To help you on your trading journey, here is a summary of 16 of these patterns and what they show!
What are candlestick patterns?One way of showing important info about the price movement of an asset is through a candlestick. They are a widely used module of technical analysis; they allow a quick interpretation of the price information from a small number of price bars. In this article we will be narrowing our attention to a daily chart in which each day’s trading is shown in detail by each candlestick. The main features are composed of:
- the body, detailing the open-to-close range;
- the wick, showing the high and low of a day. It is also known as the shadow; and
- the colour, representing the market movement’s direction.