Candle stick patterns

The first thing you as a currency trader needs to know regarding technical analysis is some basic candle stick patterns. They are widely used in many different strategies, and combined with different indicators they are a very good base of knowledge.

Doji

One very important candle stick formation is the Doji. It has been used for ages and still works as a warning light for traders. It has the same open and close price and comes with a dozen of variation, but there is three Doji's you need to know.

	Doji The most common used Doji looks like this one. It suggest indecision between buyers and sellers. The price has gone above and below the open price and close at the open price.
	Gravestone doji The open and close are at the bottom of the candle and a big nose pointing up. This is a very good reversal sign, saying that there has been alot of buyers, but the sellers took over. This usually results in that the currency pair goes down. Notice that the open and close do not have to be exactly, but close is enough. This longer the nose the better.
	Dragonfly Doji The open and close are at the top of the candle and a big nose pointing down. This is a very good reversal sign, saying that there has been alot of sellers, but the buyers took over. This usually results in that the currency pair goes up. Notice that the open and close do not have to be exactly, but close is enough. This longer the nose the better.

Bullish engulfing

The bullish engulfing pattern is very easy to spot and suggests the market has had enough of the sellers, and the buyers wan't to take over. Usually happens when the currency pair has had a down rally, but suddenly there is a big green candle covering the previous candle. A commonly used signal that the currency pair is going to go UP.

Bearish engulfing

The bearish engulfing pattern is very easy to spot and suggests the market has had enough of the buyers, and the selelrs wan't to take over. Usually happens when the currency pair has had a up rally, but suddenly there is a big red candle covering the previous candle. A commonly used signal that the currency pair is going to go DOWN.

Indside bar

The inside bar usually appears after a down or up rally, saying that there is indecision between buyers and sellers, and that you should take action. It is a candle completely covered by the previous bar.

If you are in a short position and this inside bar appears, you should consider closing your position.		If you are in a long position and this inside bar appears, you should consider closing your position

Good job! Now, take a look at your demo charts and see if you can see any of the candle stick formations above. They could be tough to see in the beginning, but once you learned to spot them they are amazing.

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