The fantastic thing about candlesticks is that you can see the direction of price movements at a glance. Not only do you see whether the candle in total is above or below the previous one, but you can also tell by the colours whether it marked a reversal or a continuation of the trend.

Certain patterns are especially vital in learning to read candlestick charts.

In some cases of course the open or close will be the high or the low. In that case you don’t have a wick in one or both directions. If there is no wick in either direction, this is referred to as a Marubozu pattern.

In another case, the opening and closing prices could have been the same. Then there isn’t any candle body but only wicks stretching up and down from the horizontal line that marks the open and close. This is known as a Doji pattern.

If the body of the candle is long with short or non existent wicks, close to Marubozu, this indicates a fairly steady movement, possibly part of a trend. The color of the candle will tell you whether it is an upward or downward movement.

On the other hand if the wicks are long and the body is short or non existent, more like the Doji pattern, this can indicate a troubled market with big fluctuations. Trend based trading will tend to be suspicious of Doji patterns, that might be a sign that the market is becoming untrustworthy.

Naturally one candlestick on it’s own is not enough to form the foundation of a trading call. You will always look at a sequence of candles. For example, you can draw trend lines along the highest highs and lowest lows on candlestick charts. These will help you to spot whether a trend is forming, or if the lines are converging, whether a breakout may be predicted. When you know the way to read candlestick charts you can base systems around these suggestions.