When it comes to candlestick charts, there are many patterns that you need to be aware of. As this is a centuries old charting method, there have been many patterns that have proven to establish just where a price is heading in the future. Again, they are not 100 percent accurate, but they happen often enough that they have caused serious traders to lookout for them.

Shadows, although they might represent anomalies within a trading range, give us quite a bit of information. A shadow is the “wick” of the candlestick; they represent either the high for the trading time frame, or the low. They are represented on a candlestick chart as the thin line that comes out from the tighter trading range. Although the highs and lows of a session might seem unimportant when compared to the opening and closing prices, they reveal quite a bit about consumer sentiment. The higher the high, the more optimistic traders are regarding the currency’s true value. If there is repeated bullish sentiment regarding a currency, yet as the session concludes people remain cautious, it is only a matter of time before the price truly breaks out above the previous body of trading.

The reverse is also true. If lower lows keep occurring, yet the body remains high, people are seriously considering selling off this currency. As this occurs more and more frequently, people will be more confident that selling the currency in a short position will be the right decision. Using the Oracle Trader is another way to take advantage of shorts.

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