# How to Read a Forex Chart - Candlesticks Explained

> Candlestick charts are the standard for forex trading. Here is how to read them, what each component means, and how to interpret common candle patterns.

**Tags:** candlesticks, chart-reading, forex-basics, price-action
**URL:** https://traderjournal.app/forex-basics/how-to-read-a-forex-chart-candlesticks-explained

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# How to Read a Forex Chart - Candlesticks Explained

Candlestick charts are the standard visualization for forex price data. Each candle represents a defined time period (1 minute, 1 hour, 1 day, etc.) and encodes four pieces of information in its shape and color.

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## The Anatomy of a Candlestick

Each candlestick shows:

**Open:** The price at the beginning of the period.

**Close:** The price at the end of the period.

**High:** The highest price reached during the period.

**Low:** The lowest price reached during the period.

The rectangular body of the candle shows the range between open and close. The thin lines extending above and below the body are called shadows or wicks.

**Color coding (standard MT4):**
- Green or white candle: Close is higher than Open (bullish candle, price moved up during the period)
- Red or black candle: Close is lower than Open (bearish candle, price moved down during the period)

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## Reading Individual Candle Shapes

**Strong bullish candle:** Large green body, small or no wicks. Buyers were in control the entire period. Strong momentum signal.

**Strong bearish candle:** Large red body, small or no wicks. Sellers were in control. Strong downward momentum.

**Doji:** Very small body (open and close nearly equal), significant wicks in both directions. Indecision - neither buyers nor sellers dominated. Often appears before reversals.

**Hammer:** Small body at the top of the candle range, long lower wick. After a downtrend, signals that buyers stepped in and pushed price back up from the session low. Potential reversal signal.

**Shooting star:** Small body at the bottom of the candle range, long upper wick. After an uptrend, signals that sellers rejected the high and pushed price back down. Potential reversal signal.

**Engulfing pattern (two candles):** A candle that is larger than the previous candle and "engulfs" it entirely. Bullish engulfing (large green candle after a red) or bearish engulfing (large red after a green) are commonly used as entry signals.

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## Timeframes

The same price data looks very different on different timeframes:

- 1-minute chart: 1,440 candles per trading day. Used by scalpers.
- 5-minute chart: 288 candles per day. Used by short-term day traders.
- 15-minute chart: 96 candles per day. Day trading and swing entry confirmation.
- 1-hour chart: 24 candles per day. Day trading entries, swing context.
- 4-hour chart: 6 candles per day. Swing trading analysis.
- Daily chart: 1 candle per day. Position trading, weekly bias.
- Weekly chart: 1 candle per week. Long-term trend context.

Most strategies use at least two timeframes: a higher timeframe for context and trend identification, and a lower timeframe for precise entry.

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