Candlestick analysis is by far the oldest method of speculating if the market price of a currency will move higher or lower in the near future. Developed over 500 years ago by Japanese rice traders, the technique aims to look for specific patterns and formations of ‘candles’ within a price chart. Despite its age, it is widely known as one of the most powerful techniques available to modern forex traders with many of the original patterns being incorporated in trading strategies today. Candlestick charts differ from a regular price chart in the formation of the individual bars representing the time frame of any given chart.
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Candlestick are geographical representations of price fluctuations for currency pair. It displays high,low,opening and closing for a security for a single day. A candlestick shape varies based on the relationship between the day's high,low,opening and closing price. The wide part of the candle stick is called "real body" and the trader closing price was higher or lower than the opening price. Candlestick also reflects the impact of the traders or investors emotion on security prices and are used by technical analyst to determine when to enter and exit trades.