Candlesticks

Candlesticks

Candle sticks are based on an ancient chinese way of grahically depicting price information. The candle has a stick and a body, although the stick can be absent. Candle sticks give a good idea about price movement. There are all kind of theories about candle sticks. But I have to warn you. There are may identifiable candle stick patterns, but according to research most of them will have equal changes of indentifying a good trade, namely 50 %.
There are only tree patterns that are more reliable namely : Tree black crows, inverted black hammer and inverted hammer.

You can read all about the research on candlesticks and more in this excellent trading book:

Candlesticks, Fibonacci and Chart Pattern Trading Tools

	Typical Candle stick pattern
	Red Candle The opening price of the period was higher then the closing price. The opening price is at the high end of the filled in body. The closing price is at the low end of the filled in body. The high price is at the high end of the stick. The low price is at the low end of the stick
	Green candle The opening price of the period was lower then the closing price. The opening price is at the low end of the filled in body. The closing price is at the high end of the filled in body. The high price is at the high end of the stick. The low price is at the low end of the stick

**Some candlestick patterns that work**
	An upside-down ammer with a black body. A bottom reversal signal with confirmation the next trading bar.
	Three long black candlesticks with consecutively lower closes that close near their lows. A top reversal signal.

All patterns are very well described on this site