How to Read Forex Candlesticks Charts

1. Step 1

   WHAT ARE CANDLESTICKS? Candlestick are a type of chart used to monitor a currency's performance over a given time. The chart indicates the opening and closing rates, daily profit or loss, and the entire range from high to low for the given period. It is a system developed by the Japanese, and introduced to Western brokers by Steve Nison, a western investor.

2. Step 2

   THE REAL BODY. The 'Real Body' of a forex candlestick chart is the large rectangle that is positioned with a vertical line extending upward from the top and downward from the bottom. The center rectangle, or 'Real Body' shows where the currency was positioned at the beginning of a trading period and where it was positioned when the same period closed. If the rectangle, or 'Real Body', is hollow, it indicates that the currency increased in value over the given time period. A dark rectangle, or 'Real Body' indicates the currency's value decreased.

3. Step 3

   DARK REAL BODIES. When the 'Real Body' of a Forex candlestick chart is dark, it indicates that the currency has lost value during the given time. In a dark 'Real Body' the opening value is indicated by the value shown at the top of the rectangle. The closing value is indicated at the bottom of the dark 'Real Body'.

4. Step 4

   HOLLOW REAL BODIES. A hollow 'Real Body' indicates that the currency has increased in value over the given period. The opening value of the currency is indicated at the base of the hollow 'Real Body' and the closing value is indicated at the top.

5. Step 5

   SHADOWS. The vertical lines that extend up and down from the 'Real Body' in a Forex Candlestick chart indicate the range of movement a currency's value has traveled over the given period. The lowest point of the line extending downward from the base of the 'Real Body', called the 'Lower Shadow', shows the lowest value the currency reached during the given time. Likewise, the highest point of the 'Upper Shadow', or the line extending upward from the top of the 'Real Body', shows the highest value the currency reached during the given period.