Forex candlesticks originated from Japan a very long time ago, and they have become popular since then. What makes them the preferred chart type for many Forex traders is that every single candlestick contains information about the opening price, closing price, the highest price point, and the lowest price point for every given period.
These Japanese candlesticks often form patterns that predict future price movements. Some of them predict bullish price movements, and others suggest bearish price movements. They may appear as a single, two, or three candlestick patterns.
Here are the most common candlestick chart patterns in Forex: Bullish Candlestick and Bearish Candlestick (with images).
All Bullish Candlestick Patterns
There are eight common Forex bullish candlestick patterns. All these patterns either suggest the beginning of a new uptrend or a continuation of a major uptrend.
This is a list of all the bullish candlestick patterns in Forex:
All Bearish Candlestick Patterns
Bearish candlestick patterns in Forex are the direct opposites of their bullish counterparts. They suggest a continuation of a major downtrend or the beginning of a new downtrend.
These are the most common types of bearish candlestick patterns in Forex:
Neutral Candlestick Pattern
The only common neutral candlestick pattern is the Doji. The Doji forms when the market is undecided whether to go up or down. In the end, what forms is a candlestick with a small body and short wicks above and below the body.
A few more words about candlesticks
Because of the way a candlestick is formed, the opening price of a new time period is often close to the closing price of the previous time period. This makes Forex charts look like a continuous flow of candlesticks in trends moving up and down. Trade opportunities abound in these charts.
A common anomaly in the charts is when there is a gap in Forex prices. But even in this case, there are trading opportunities for those who know how to interpret them.
All these candlestick patterns have been there long before the MT4 trading platform made its way into our lives. And till this day, they continue to do a great job of predicting potential price movements.
However, just as it is with many other Forex trading tools or concepts, Forex candlestick patterns are not meant to be used in isolation. You may have to combine them with some other Forex trading tools to get the most out of them.
By the way, if you easily get tired of staring at Forex charts, what you need is this chart overlay indicator that gives your MT4 a fresh, modern look. The indicator also makes your chart look more compact and easier to analyze.