Candlesticks do not form that frequently in Forex charts due to the nature of the market, but when they do form, they are often powerful and reliable. There are a few candlestick patterns that are particularly useful and which you should make it a point to remember.
But before we go into looking at these candlestick patterns, there are some terms you must familiarize yourself with if you have not already.
Reversal Pattern
A reversal pattern is a candlestick pattern that is formed which indicates the possibility of a reversal in trend direction. A bottom reversal pattern is a pattern which indicates the possibility of a change in direction after a downtrend and a top reversal pattern is a pattern which indicates the possibility of a change in direction after an uptrend.
Doji
A Doji is a candlestick where the opening and the closing prices are the same or just 1-4 pips’ difference. A Doji indicates indecision in the trading direction and neither the buyers nor the sellers could move the price to their advantage. There are many different types of Doji, but what you have to know for now is that the qualifying point for a Doji to be a Doji is that the opening and closing prices are the same or very close.
