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Series of Free Forex ebooks Educational guide for beginners on exploring Forex charts. Forex Market Hours Forex Trend Line Book.

Series of Free Forex ebooks. Forex Pivot Points Book. Types of charts Candlesticks Chart patterns Candlestick charting uses rich terminology to describe different candlestick formations.

Doji candle has no or an extremely short body and long shadow s. It is formed when buyers were unable to overcome sellers' pressure and push the price any further from an open point, and at the same time, sellers met strong buyers' pressure and also didn't succeed in their efforts to push the price down from the open point. The result is a draw: However it can not be used along.

The confirmation next following candlestick is needed to reassure that market has changed its direction. Gravestone doji gives a strong signal when appears after a long bullish candlestick at the top of an uptrend.

It indicates that although buyers were confidently trying to push the price up, eventually sellers gained enough strength to return the price to its open position. A trader should consider taking profits and exiting if trading a long position, or place a tight stop below the close price. A dragonfly candlestick has open, close and high: It should be treated seriously when spotted at the bottom of a downtrend while following after long red candle, as it signals that buyers have got enough strength to return the price from its advancing low progress to the starting open point.

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When trading short position a trader should think of an option to secure profits and close a position or set a protective stop tighter as a market can resume a U-turn.

Spinning top is more an indecisive candlestick, as neither buyers nor sellers had demonstrated their power and finished with zero progress. When appears after a long preceding candlestick, this doji type always requires following confirmation next candlestick should be bullish in the downtrend or bearish in the uptrend. A spinning top candlestick also is an indicator of indecisiveness between buyers and sellers. The color of the body here is not important.

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Several spinning tops going one after another indicate a current stand-off between bulls and bears. Found during a strong trend spinning tops "group" can signal of a possible price reversal. However it could be also that a strong trend is only "resting" temporarely, and after a short consolidation, the price will resume its previous direction. Hanging man and shooting star are bearish signals of potential price reversal.

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Their distinctive features are: Long shadows of hanging man are results of strength of forming bears' pressure. Same as for the shooting star — it's apparent that bears managed to stop the price from advancing and seriously pulled it down. Both candlestick patterns require further confirmation following red candle before opening new positions.

Hammer and inverted hammer candlesticks are result of a growing buyers' pressure when occur at the bottom of a downtrend. Although these patterns are signs of a possible trend reversal, they need to be confirmed before taking actions.

The green color of a body for hammer as well as inverted hammer is considered as a much stronger bullish signal than the red one.