Forex Trend Trading Report Part IV - Simple Candlestick Patterns

In this Part of the Trend Trading Report we'll cover candlestick patterns, what do they look like, what are they meant to communicate, and how they impact the trend trader.

Wikipedia defines a candlestick pattern as "a movement in prices shown graphically on a candlestick chart that some believe can predict a particular market movement. The recognition of the pattern is subjective and programs that are used for charting have to rely on predefined rules to match the patterns. there are 42 recognized patterns that can be split into simple and complex patterns."

The following patterns are referred to as simple patterns. In all cases below, these simple patterns are single candles in different colors and shapes. Note: a black candle/black body is bearish and candlesticks on some currency pair charts may use other colors (e.g. red). A white candle/white body is bullish and candlesticks on some currency pair charts may use other candles (e.g. green).

The following patterns are provided by Wikipedia.

Summary

When studying candlestick charts, the question in the back of my mind is "what is this chart trying to tell me?" A grasp of the simple candlestick patterns helps to provide insight into the answer to that question. It's difficult to remember the meaning of all the patterns. Keep a copy of the above chart by your computer when trading. Refer to it often.

End of Part IV

Part V of this report will be released in about one week. The topic is "Complex Candlestick Patterns And How They Impact The Trend Trader"

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