Knowing how to read candle stick should be one of the first items new traders check off their list. By being proficient in the basics allows traders to continue to grow and expand there capabilities. This week we are going to take a look at reading candle sticks and the anatomy of candle sticks.
There are 4 parts to every single candle stick you will see on your charts. There is the Open, Close, Low and High of each candle stick, it doesn't matter if it is a bullish candle (green) or a bearish candle (red)
The open of a candle is where the current candle opened when the previous candle closed. At times we can see candle gap up or gap down from the close of the previous candle. This is now as a gap.
The close of the candle is where previous candle closed. For a bullish candle (green) traders look to see a close above the open. This would indicate that price is/has moved up during that candle. For a bearish candle(red) traders look to see a decrease in price, that means the close need to be below the open.
The high of each candle shows the highest price that was hit during that candles duration. For bullish and bearish candles the high will always be on the top of the candle.
The low of each candle shows the lowest price that was hit during the candles duration. Same thing as above bullish and bearish candles will display a low on the bottom side of each candle, let take a look at a demonstration to get a better idea.
As we can see above there are 4 parts to each candle, regardless if it is a bullish or bearish candle. By knowing the basics traders will be able to easily identify what is happening and properly formulate a plan of attack.
Not only that know the anatomy of a candle, a trader will be able to identify strong candles vs weak candles. Strong bullish candles close relatively close to there high. Strong bearish candle close relatively close to there low. This shows strength and potentially could be a good entry depending on a handful of other factors.
Be sure if you are new to trading you spend time learning the basics before moving on. If you need help take advantage of our free basic course of become a Gorilla Futures Member and get access to our main Price Action Course, you can view both options here .