Candlestick Patterns Cheat Sheet for Forex

Introduction

Learn more about Forex trading is a complex game that requires a deep understanding of market trends and signals. The Japanese candlestick chart is one of the most powerful tools in a trader’s arsenal. This guide will serve as your ultimate candlestick patterns cheat sheet, making identifying and interpreting various candlestick patterns easier. Whether you’re a newbie or a seasoned trader, this guide will help you make informed trading decisions. For a broader foundation, see BabyPips’ guide to candlestick patterns and Investopedia’s breakdown of powerful candlestick patterns.

What Are Japanese Candlesticks?

Japanese candlesticks are a type of price chart used in technical analysis that displays the high, low, open, and closing prices of a security for a specific period. Each candlestick represents one trading day and consists of a body and wicks (or shadows). Understanding forex risk management strategies alongside this candlestick patterns cheat sheet will help you apply patterns more effectively in live trading.

Anatomy of a Candlestick

Body: The real body represents the range between the opening and closing prices. A long body indicates strong buying or selling pressure, while a short body suggests little price movement.

Color: (doji)

• White/Green: Indicates the closing price was higher than the opening price (bullish).
• Black/Red: Indicates the closing price was lower than the opening price (bearish).

Wicks (Shadows): These show the highest and lowest price points reached during the trading period. Long wicks indicate significant price movement, while short wicks suggest limited movement.