Candlestick charts: The ULTIMATE beginners guide to reading a candlestick chart

pay traders are you reading Candlestick charts correctly that's a question you have to ask yourself and it could be directly contributing to your ability to profitably trade in any market so in today's video we'll be talking about the anatomy of a candlestick and later on the video will even be diving into how these candlestick charts can help us to determine and predict market direction so if that all sounds too interesting to you then make sure you click that like button for more videos like this go and click that subscribe button while the intro and disclaimer roll to be alerted when we come out with other content and I'll see you guys on the other side [Music] all right treasurer so we're gonna go ahead and quickly go over the anatomy of the candlestick and then directly after that we'll talk more about what it actually represents and how we can use these candlestick charts to determine market direction so let's go ahead and talk about the candlestick that you see on your screen each candlestick is going to have four main points your main points are going to be the open of the candle the close of the candle the high of the candle and the low of the candle the open and close will be determined by the top and the bottom of the actual body of the candlestick the body of the candlestick is this green area you see here and green represents a bullish candle or a candle that closed above where it opened so this candle had a starting point and as soon as the our day or weekly candlestick that you're looking at started as soon as that candle starts that is considered the open and we'll talk more about top frames in just a second but that's considered the open of the candle now what happens after the open is shown by the shadows or the wicks which are these black lines here and by the close of the candle the shadows in the wicks represent where price action went so in this case we would have had a candle that started here at the open pushed down to the low then back up and then passed our clothes to the high of the candle creating that wick and then back down and closing at the end of whatever timeframe you're looking at to create the close of the candlestick so for this example let's pretend that this is a daily chart so the beginning of the day this market would have opened here at the open price action would have moved down to the low up to the high and then back down at the end of the day to close right here at or close and this is an example of the anatomy of a bullish candlestick now we'll quickly go over a bearish candlestick as well now as you may have noticed these two are very similar the only difference in a red or bearish candlestick is the fact that the close was below the open so here we have the open and again we'll use this as a daily candle just for example purposes so the beginning of the day we haven't opened here and this candle would have opened there pushed up to a high of the candlestick pushed all the way down to the low creating that bottom wick and then closed at the end of the day right at our clothes and since we have a clothes that is below our open then this candle represents a bearish day so that timeframe was a daily timeframe so that would represent a day where markets fell off a day where markets closed below where they opened and that would represent weakness in a market so that was a quick run-through of the anatomy of a candlestick again the high represents the highest point price actually got during this specific time frame for this example we were using a daily timeframe so this would be the highest point the market got to in that daily time period after the open which was here and this would be the lowest point price section got during that daily time period until it pushed back up and came here for the close for a bearish candle the close will always be below the open or on the bottom of the body of the candle and for a bullish candle the close will always be on top of the body or above the open of the candle alright so now that we've quickly been over the anatomy of a candlestick let's jump into what these candlesticks actually represent and then later on we'll discuss how we can use candlestick charts to predict market direction all right guys so let's dive into what these candlesticks actually represents well each one of these candlesticks represents a specific time period if I click over here on time periods you can see that we have time periods ranging from one minute all the way to one month so with that being the case if we were to click the one-minute chart then each candlestick would represent one minute or 60 seconds of price action we would have the open of a candlestick every 60 seconds on that one-minute candlestick chart we would have price fluctuating within those 60 seconds down to the low up to the high and then we would also have the close of a candle every 60 seconds so each one of these candlesticks would represent 60 seconds on a one-minute chart and if we were on a one-month chart if we go all the way to the other end of the spectrum then the same rules apply if we were only one month chart if we were to click this one month chart here then each candlestick on that chart would represent four weeks of price action we would have an opened at the beginning of the four weeks we would have price action in between the four weeks going to the low and the high of the wick or the shadows of the candles and that's what would represent where price actions been and then we would have a close of the candle at the end of four weeks all of this is represented about one candlestick depending on the time frame your own so currently we're on a one-week chart that means that when we scroll down the chart here each one of these candlesticks represent a full week of price action for the green candlesticks we have a full week of price action that started at the open or the bottom of the green candle we have price action in between represented by these wicks coming down to the low and moving up to the high and then at the end of the week we have the close of the candle so that represents a bullish week in price action for our current pair currently we are only pound allsey so for this pair during this full week of price action we had a bullish week represented by this candle now the same thing applies for a bearish week and I'll go through that really quickly so for this case we have an open at the top of the body is where this market opened we have where price has been represented by the wicks the high and the low of the red candle and the close of the candle at the end of the week at the bottom of that body so that would represent a bearish week of price action and again guys these same rules apply no matter what time frame we're on and this can go anywhere from a 1-minute chart all the way up to a one-month chart so each one of these candlesticks represents a certain period of time and once we start putting these candlesticks together is when we can start determining market Direction based on candlestick charts so that's what we're gonna dive into now so combining all of these candlesticks together is how we can start to actually determine market direction and determine trend and also determine structure levels such as support and resistance and these are going to all be foundational parts of success in any trading career on any market understanding how to read a candlestick chart is the foundation of any good trading strategy so we have a starting point down here correct this market pushed up from this level with a nice impulsive move indicating a lot of buyers coming in from that direction now we're looking for next is to see if that level is broken so we have a high and when I say high this time I'm not talking about the high of a single candlestick I'm talking about the high that's represented about the combination of candlesticks throughout this impulsive move up which was right here the high is what's created before the pullback so this pullback represents people selling from the market a combination of people selling and the reason they're selling can be because of many different factors some people that were in down here at this level that we started from are now just taking profit other people may be jumping in based on some type of fundamental news release or based on some type of technical analysis but all of that is really irrelevant information because all we want to do is look at the chart and understand what it's doing so once we've created that high we're looking for a pullback and then the creation of a new high this 3-point move is how we can start to determine market direction once we have this 3-point move a low to a high to a pullback or higher low to a new high once that's created then we can determine that the market direction is currently up the market Direction is bullish and with that being the case we have the ability to restrict ourselves to only bullish trades to only long trades and this can really be beneficial to a trading strategy now what are we looking for after this 3-point move and this is where a lot of traders get confused well we're looking for this uptrend to continue before the break of our support level this is our support level so before this support level gets broken we expect the market to come up and break above this resistance level and continue our uptrend and that's exactly what we get here we have this pullback again selling pressure from taking profit from traders taking positions based on fundamental news events and traders taking positions based on technical analysis and then we have another push up continuing our uptrend because we've now broken above our previous high and since we have a break above our previous high into a new high we expecting we're expecting another new high and we're expecting it before the break of this support level right here now some main places that we can expect this market to turn around while in this uptrend are our previous points of resistance which would be represented by this in this that's a spot where the market is likely to continue its trend to the upside or we can look at other support and resistance levels through this zone as likely zones for the market to continue its trend other examples of that would be right in here because that level has acted as resistance before and even this lower level represented by a blue line any of those levels are highly likely places for the market to continue in its uptrend or in its current trend which for the moment on the pound ozzie here is up so we're going to continue determining market direction like this and goz it's important to remember that no matter how you're determining market direction it's never going to be 100% accurate but doing this and creating rules for determining trend is going to keep you consistent when it comes to placing trades and that's what's very very important when trading in any market so now we have this pullback yet again a high a pullback and what do we get a new high the markets going into a new high now we'll wait on that pullback there we go we start we're starting to have a pullback now so we'll draw our line yet again and what are we waiting for at this point well we're waiting for the market to break above this high before we break below this lower support level right here let's see what we get market pushing down pushing down okay now look on this edge of the screen and you can see that we have a break in close below that support level so let's use those same rules unless determine trend based on this candlestick chart based on this candlestick chart we've now created a reversal we've now broken the structure support level that we were looking at before since we've done that we expect this market to trade lower now instead of higher so now our bullish direction bias hour-long bias is gone completely we're no longer looking for this market to head higher than our previous level we're now waiting for a pullback and a break below the newly-created support level which is going to be right here so now that we have this newly created support level and we're starting on this pullback we're gonna be waiting for the market to give us a reason to go short and then we're waiting for a breaking close below this previous support level so this is how you can determine market direction using these candlestick charts cast pointing out these highs and lows in waiting for the market to tell you whether or not it's going to be supported by that support level or continue in that current trend or if it's going to reverse like what we just saw and guys there's no need for an indicator on the chart for me to know this information I don't need moving averages I don't need an RSI indicator to tell me that this market wanted to reverse right there I've determined that information based solely on these candlestick charts and I'm showing you guys how to do the same exact thing so now that we've created this downtrend remember we talked about this at the beginning of this section of the video we're waiting on this 1 2 3 move we have a low a lower high and then a lower low created this is telling us now we're in a downtrend now we can expect this market to continue in this downward direction let's see what happens well we get this small pullback and then we do continue in the downward direction right there so we got that small pullback continuation down another pull back and another continuation down and now we're still continuing this trend and expecting this market to create lower lows so we continue taking a look at this market as you can see we're dropping down now and now beginning to rally still in this trend guys I want to make sure I make that a clear point I'll go ahead and take this line off so it doesn't get confusing until the market breaks this level of resistance right here I am considering this market in a downtrend these are just the rules that I've created to personally identify trend so we have this pullback again pushing up towards our resistance level but not breaking it so still we're in this downtrend and now we're pushing even lower and here we are at current day and currently this markets pushed up so right now guys we're just in this period of consolidation on the pound Ozzy we're looking at this area in through here as our consolidation area now on this specific time frame because of this consolidation we see that doesn't mean that I'm gonna be looking for a bearish trade when I see markets that look like this I just avoid them all together until the market shows me what it wants to do until the market shows me it's going to continue this downtrend by breaking the low then after the mortgage shows me what it wants to do I'll look for my next opportunity to go short or another possibility is that this market pushes up and breaks above our resistance level and in that case I'll be looking for a new long opportunity so when markets start to consolidate like this I just wait for the market to tell me what direction it wants to go another thing that's very important and can be very beneficial to trading strategies and guys I am considering producing a video that will explain multiple time frame analysis and which time frames you should pay the most attention to when it comes to structure levels and trend and what I'm gonna do is when this video gets 500 likes that's when I'll produce the multiple time frame video because I want to make sure there's enough people that are interested in that topic before I do so so if you're interested in learning more about multiple time frame analysis and which time frames are most beneficial for determining trend and for structure levels to make sure go ahead and click that like button for me subscribe here to the trading channel if you're new and you found this to be interesting I do have a completely free course explaining trend identification and structure levels and a lot more detail than I went into here on this video if you're interested in receiving that then I send it out to everyone subscribe to the email list at the trading channel so you can click the link in the description below label free training here at the training channel we also offer an intensive training course called the EAP training program and if you'd like to learn more about that program then there is a link in the description for that as well I hope you guys trade green I hope you have a great rest of your day and rest of your week if you have any questions for me leave them in the comment section below and I'll talk to you guys in the next [Music]

Channel: The Trading Channel

Views: 3,319,022

Rating: 4.9627938 out of 5

Keywords: The Trading Channel, Jason stapleton, Akil stokes, Astrofx, How to make money online, How to read a candlestick chart, trade empowered, Forex reviews, Forex trading, Stock market, Stock trading, Day trading, candlestick charts, strcuture trading, crazy trading, live trading, forex strategies, forex profits, profits made live, live stock trading

Id: jmoOrgTP5XQ

Length: 16min 25sec (985 seconds)

Published: Sun Sep 24 2017

Reddit Comments

[u/2good2beDrew]

I also highly recommend the book “Trading: Technical Analysis MasterClass” by Rolf Scholtmann. Easy read and super informative to get the basics of TA down

[u/branch723]

Thanks, now I understand 😁