I thought I’d take the time to do a post on something that I talk about in my free course that I offer. Obviously learning the fundamentals is an important part of forex and candlestick graphs are no exception to the rules.

As you can see here, this is a close up view of a red and green block on a candlestick graph and I have broke down exactly what each element means to you.

The body is signifies the difference between open and close. If it is green than it has gone up in value since the open and if it is red it has gone down in value. These are the two easiest things for people to understand, but everyone has an issue with the black thing sticking out of the top and bottom.

That black thing is known as the shadow. It is a way of signifying the activity of buyers and sellers of forex. Basically a long shadow shows that there was huge fluctuations in the price that was being offered in trades and a short signifies that things stuck mainly around the opening price.

If you want to think of it another way, it signifies the battle between the sellers price and what buyers want to pay. Obviously there is a difference (if you follow markets), but sometimes the differences can create pretty wide spreads. Knowing about these spreads can be seen through a simple candlestick graph and you obviously need to know how to read it.