Basics of Price Patterns

Price patterns are often studied in several ways. They can be studied with:

  • Candlesticks – These
  • Bar graphs
  • Line graphs

 

Candlesticks

The image shown below is that of a graph drawn using candlesticks. These candlesticks contain a great deal of information for a trader. It tells the trader the opening price, closing price, highs and lows of a selected period.

As you can see, a candlesticks resembles a candle. The image below shows a candlestick’s one day price fluctuations. It shows a day’s low, open, close and high. A candlestick will look like the image shown below.

The image shown above is an up candlestick. An up candlestick has a high that is higher than the low and a close that is higher than the open. The body of the candle represents the opening and closing price of that period.

The image shown below is a down candlestick. It has a low that is lower than the high and a close that is lower than the open. The body represents the opening and closing prices of that period.

An up candle stick may be colored green at time and a down candlestick may be colored red at times. In this tutorial, down candlesticks are colored blue while up candlesticks are colored white.

Bar graphs

Bar graphs can also be used to determine price trends and patterns. A period’s high, low, close and open can be represented by a simple bar. The image shown below is that is a simple open bar.

Simple Line Graphs

Simple line graphs are also another way to interpret price trends and patterns though it is not as useful as the candlesticks and bar graphs. An example of a line graph is shown below.