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Candlestick: meaning in forex and gold trading

A candlestick shows the open, high, low and close for one period, with a body between open and close and wicks to the high and low.

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Definition

Candlestick: A candlestick shows the open, high, low and close for one period, with a body between open and close and wicks to the high and low.

Reading a candle

A bullish candle closes above its open and is usually green or white. A bearish candle closes below its open and is usually red or black. The wicks show how far price travelled beyond the body. Long wicks suggest rejection of higher or lower prices.

Patterns and context

Patterns such as pin bars, engulfing candles and dojis mean more at key levels and on higher timeframes. A single candle is weak evidence on its own. The chart patterns e-book covers multi-candle patterns in depth.

Worked example

Gold drops to 4,000, trades as low as 3,985 and closes the day at 4,020. The long lower wick shows buyers rejected prices below 4,000 that day.

Common mistakes

  • Trading every pattern regardless of location.
  • Reading intraday candles before they close.

If you follow trade signals, for example the gold signals or EUR/USD signals, understanding this term helps you size and manage each trade yourself. The free Forexuro Telegram channel shares daily market updates where these ideas are used in practice.

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Average true range (ATR)

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Pivot point

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Tools and guides

Frequently asked questions

What timeframe is best for candles?

There is no best one; higher timeframes give fewer but more meaningful signals.

What is a doji?

A candle whose open and close are almost equal, showing indecision.

Education only, not financial advice. Trading forex, gold and CFDs carries a high risk of losing money, and leverage magnifies both gains and losses. Past performance is not a reliable guide to future results. Read our risk disclosure.