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Feb 21, 2009 copyright © David S.Y. Wong, published in ArticlesBase.com

The Asian candlestick, hereafter simply referred to as candlestick or candle, is a very effective way to convey the open, high, low, close price points for the period in question, which might be minute, hour, day, week, etc. as supported by the charting software.

The body of the candlestick is defined by the open and close prices. The tails of the candlestick (some call them wicks or shadows) indicate the high and low prices. A color or shading convention is used for the body of the candlestick to convey the up/down direction of the candlestick. An up candle has the closing price higher than the opening price. A down candle has the closing price lower than the opening price. Colors used for the body include red and blue for down candles; green and white for up candles – subject to the convention used in the charting software which might grant individual customization.

Visually, candlestick charting is very effective in conveying the up and down periodic movements of the stock price. At a glance, the individual is healthy to see whether a stock shut higher than its opening price (up candle), or vice versa, a stock shut lower than its opening price (down candle). The length of the body as well as the tails show the range of price movement for the stock. And the individual is healthy to follow the progression of candlesticks in successive periods.

There are various candlestick patterns such as doji and hammer (just to cite two from the long list of patterns which might span 1, 2, 3 or even more periods) that are used in candlestick technical analysis where significant conclusions are attached to apiece pattern.

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Feb 21, 2009 copyright © David S.Y. Wong, published in ArticlesBase.com

Technical Analysis Vs Fundamental Analysis

So what fundamental analysis and technical analysis in Forex Trading?

Technical Analysis is classified looking at the charts, while Fundamental Analysis is looking at the facts, figures, company outlook growth etc.

The questions is can fundamental Analysis used along with technical analysis in Forex trading? It is a good question because many might argue that a country might not have an inherent value.

It is not a complicated answer. Fundamental analysis within a nation is a case of finding where about in the business cycle the economy is at any particular time with the affect it has on the value of the currency. There are many pointers that can indicate where the economy is. Within the normal cycle of inflation and deflation the pointers that you can look for are things such as current interest rates and the Gross National Product.

There are many equations that affect the value of currencies and all in different ways apiece pointer affects apiece countries currency differently.

For example in Australia, currency dropping is normally associated with interest rates that are on the up. So fundamental analysis can affect what happens with the technical analysis.

Technical analysis in Forex trading is considered to be the opposite of fundamental analysis. It tries to predict the future of the Forex market movement by looking at previous data and uses this along with current tendencies as indicators as to what is going to unfold. Technical analysis doesn’t use the inherent worth of the investment.

Foreign exchange market is rather suited to technical analysis because it is simple to look back at the previous statistics of the currency pairs. This is by far the ideal way of predicting the future Forex market. Modern economies are so very complicated nowadays that many state it is nearly impossible to predict the future of the Forex markets without the help of past technical data.

So if you would like to learn more information on trading forex market then feel free to visit the CFD FX REPORT. They specialize in helping education clients trading the forex market, or CFD markets. They can also help you find the ideal forex broker in the market.

Happy Trading