K-line combination also known as the candlestick chart is a type of technical analysis, which belongs to the basic content, is easy to learn and understand and is mainly used for short-term trading. It is characterized by frequent trading signals, small single-digit profits and losses, and more stable transactions. Of course, the stable transactions mentioned here may mean stable profits or stable losses.
Whether the candlesticks chart can be applied to the real trading market is not about how many historical tests the trader has conducted, or how high the winning rate is in history, or the profit and loss ratio, but whether the logic behind the candlesticks chart is aligned with the market and the fundamental laws of operation.
Investors who want to do a good job in forex trading must understand the analysis of forex trends. The analysis of foreign exchange trends requires the use of a candlesticks chart as support and resistance. Candlesticks charts are the key to successful trading for many investors. So how can you use the candlesticks chart to effectively analyze the trends in the foreign exchange markets?
First of all, we must master a basic understanding of the foreign exchange candlesticks chart form. The candlesticks chart is different every day in the foreign exchange market, but careful observation can reveal that some charts are the same. After observation and summary, the professional usually identifies several typical patterns, such as the main axis trend, cross-line trend, etc. These typical trend graphs have their own characteristics. Investors should learn and master these typical trend graphs. They should know the basics of the in-depth analysis of candlesticks graphs, master typical graph patterns, and be better at analyzing complex trend graphs.
The second step is to deeply analyze each line and the root cause that affects its trend. The candlesticks chart of foreign exchange trends is composed of different lines. Each line may affect the next trend. At the same time, investors must understand the characteristics of each line. Every trend has reasons, it is necessary to analyze the reasons behind them, such as why the sun line suddenly appeared, why it appeared, why the momentum is very slow, and important financial events or market news, and then develop your analysis. After a long time, traders will naturally learn to analyze the foreign exchange candlesticks chart in-depth.
The third is to learn to use trading tools to analyze the candlestick charts. For example, traders who often make foreign exchange transactions know that there are many lines on the foreign exchange candlesticks chart. These lines have different meanings. At the same time, investors can also draw their own lines for trend analysis, which is clear at a glance. Finally, of course, there is also some professional analysis software, investors can consider based on their individual situation.
In addition, if investors analyze the candlesticks chart of foreign exchange trends at a deeper level and dig out the secrets behind it, they also need to learn to take a long-term perspective and not stick to the current trend. They should conduct a macro analysis and create a trading strategy plan.
How to predict the rise and fall through candlesticks
The candlesticks chart is the best technical analysis tool. Different investors will have different opinions when looking at the candlesticks chart, so there will be different ways of trading. Many different results were analyzed, but there are mainly two results: loss and profit.
There is a little trick to working with the candlesticks chart: first look at the yin and yang, then look at the entity and finally look at the shadow line.
1. Look at yin and yang
Yin and yang represent the trend direction, which is either long or short. The yang line indicates that the current market is in an upward trend and may continue to rise, and the yin line indicates that the market is in a downward trend and may continue to fall. Taking the yang line as an example, after a period of long and short trading, a close higher than the open indicates that the bulls have the upper hand, so the yang line indicates that the price will continue rising in the next stage.
2. Look at the entity
The entity refers to the difference between the closing price and the opening price of the candlesticks chart. The larger the difference, the stronger the power of the candlesticks chart. Therefore, choose a candlesticks chart with a large physical part in the transaction, such as the big Yin Yang. The probability of successful trading will be higher when the big Yang line is used, which helps traders learn more about risk management in trading.
3. Look at the shadow line
The shadow line refers to the highest low of the candlestick or the difference between the lowest price and the closing price. For example, the upper shadow line is the difference between the highest and closing prices. The smaller the gap between the highest point and the closing price, the longer the upper shadow line is, overshadowing the upward force. At such times, it is more advantageous to buy or sell short. The lower shadow line refers to the price difference between the lowest price of the candlestick and the closing price. The longer the lower shadow line implies that the downward force is blocked, and the upward counterattack is about to be powerful. Therefore, if you see that the upper shadow of the candlestick is too long in the transaction, don't go for a long position. Likewise, if you see that the lower shadow of the candle is too long, you cannot go short.
It is very obvious how to use the candlesticks chart to judge rising and falling prices. It can be said to be simple and easy, but there are also certain risks. There is no way to be 100% correct, so investors must have a clear direction. It is common knowledge that you must use a stop loss in trading, and pay attention to the upward trend of the international market. If the market changes greatly, you must make a timely change in your strategy.
High-risk investment warning: Trading Foreign Exchange (Forex) and Contracts for Differences (CFDs) is highly speculative, carries a high level of risk and may not be suitable for all investors. You may sustain a loss of some or all of your invested capital, therefore, you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with trading on margin. Any opinions, news, research, analysis, prices or other information contained in this presentation is provided as general market commentary and does not constitute investment advice.
Editors’ Picks
EUR/USD rises above 1.1800 toward nine-day EMA barrier
EUR/USD rebounds after two days of losses, trading around 1.1810 during the Asian hours on Tuesday. The technical analysis of the daily chart shows that the pair remains slightly below the ascending channel pattern, suggesting a potential bearish reversal. However, a return to the channel would revive the bullish bias.
GBP/USD losses slow as BoE rate decision looms
The Pound Sterling (GBP) took another step lower amid a cautious stance against the US Dollar on Monday, easing back from recent multi-year highs as investors positioned ahead of a busy week of UK data and the Bank of England's first policy decision of 2026.
USD/JPY stays defensive near 155.50 as US Dollar upside stalls
USD/JPY stays defensive in tandem with the US Dollar in the Asian session on Tuesday, hovering near the 155.50 barrier. The USD found support on Monday after the upbeat US economic data bolstered the Fed rate cut pause stance. Meanwhile, uncertainty over the US jobs data release and a risk-on market mood trigger fresh selling in the Greenback.
Editors’ Picks
AUD/USD pares back gains toward 0.7000 after RBA Bullock's presser
AUD/USD fades the bounce to 0.7035 in the Asian session on Tuesday, as traders weigh RBA Bullock's comments during the press confeerence. Earlier on, the Reserve Bank of Australia (RBA) delivered on the expected 25 bps interest rate hike to 3.85% and signaled further tightening, lifting the Aussie across the board.
Gold rebounds; will it last?
Gold stages a comeback in Asian trades on Tuesday, after having found brief support near $4,650. The US Dollar uptrend stalls amid US-Iran de-escalation, easing US-India trade tensions and data disruption. Gold fails to close Monday above the 21-day SMA, but RSI recaptures the midline on the daily chart.
USD/JPY stays defensive near 155.50 as US Dollar upside stalls
USD/JPY stays defensive in tandem with the US Dollar in the Asian session on Tuesday, hovering near the 155.50 barrier. The USD found support on Monday after the upbeat US economic data bolstered the Fed rate cut pause stance. Meanwhile, uncertainty over the US jobs data release and a risk-on market mood trigger fresh selling in the Greenback.
Zilliqa rallies over 20% ahead of Cancun EVM upgrade
Zilliqa price is extending its gains, rallying over 20% to $0.006 on Tuesday after soaring nearly 34% the previous day. The upcoming Cancun upgrade this week is boosting investor sentiment, despite broader weakness in the crypto market. ZIL continues to attract strong buying interest, supported by rising trading activity and improving derivatives metrics.
Macro outlook improves despite the geopolitics
In the headlines, geopolitical have overshadowed an otherwise benign macro environment in early 2026. While market jitters around the US intervention in Venezuela and the sudden tariff threats over the control of Greenland faded quickly, the events have left a sense of unease of what might come next.
RECOMMENDED LESSONS
Making money in forex is easy if you know how the bankers trade!
I’m often mystified in my educational forex articles why so many traders struggle to make consistent money out of forex trading. The answer has more to do with what they don’t know than what they do know. After working in investment banks for 20 years many of which were as a Chief trader its second knowledge how to extract cash out of the market.
5 Forex News Events You Need To Know
In the fast moving world of currency markets where huge moves can seemingly come from nowhere, it is extremely important for new traders to learn about the various economic indicators and forex news events and releases that shape the markets. Indeed, quickly getting a handle on which data to look out for, what it means, and how to trade it can see new traders quickly become far more profitable and sets up the road to long term success.
Top 10 Chart Patterns Every Trader Should Know
Chart patterns are one of the most effective trading tools for a trader. They are pure price-action, and form on the basis of underlying buying and selling pressure. Chart patterns have a proven track-record, and traders use them to identify continuation or reversal signals, to open positions and identify price targets.
7 Ways to Avoid Forex Scams
The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?
What Are the 10 Fatal Mistakes Traders Make
Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.
The challenge: Timing the market and trader psychology
Successful trading often comes down to timing – entering and exiting trades at the right moments. Yet timing the market is notoriously difficult, largely because human psychology can derail even the best plans. Two powerful emotions in particular – fear and greed – tend to drive trading decisions off course.