When the Price close above the opening price for a given time period (it could be 1min, 5min, 15mins, 1hr, a day etc), the candle is bullish. In such a case, there is a buy or a rally. It also means that buyers outnumber or overpower the sellers and they drove price up from where it opens to the close of that time period. The green arrow shows a bullish candle where the price at close is above the price at open. Or the closing price is greater than the open price.
When the price close below the opening price for a given time period, we have a bearish candle. It is indicated by the red arrow. Bearish candle always indicate that the selling pressure was greater than the buying pressure for a given time period. Sellers outnumber the buyers and price fell.
The Second thing you must do to trade profitably is Know the Trend for the Pair you want to Trade and; Trade with the Trend.
It is a commonly known slogan in Forex that the trend is your friend. Yes it is! Trading against the trend will cost you your capital. You are inviting failure if you break this rule.
What is the Trend?
The Trend is the direction of the market. Where the market is heading to. Trend could be Up
or Down or Sideways. That is, is the market going up or down or moving sideways. These are the three basic types of market direction we can have.
You are going to determine an Up Trend when the market or price is having higher highs and higher lows. For instance look at the chart below (GBPJPY Daily Chart)
You can see from the chart that price is increasingly moving higher. In such a case the trend is UP. Let’s see another example. GBPZND Daily Chart
In such a case, we see that the price keep having higher highs, and higher lows. So the Trend is UP.
Let’s see another example. This is CADJPY daily chart
Price is in an UP trend on this Pair.
We determine a down trend when price keep making lower highs and lower lows. Remember when the price continues to make lower highs and lower lows, the trend is down. But when price keep making higher highs and higher lows, the trend is UP.
For instance, look at this EURUSD pair. You can see that price is in a down trend for a long period of time. Every attempt to rally or go up was nullify by several move down. Price keeps making lower highs and lower lows for a long period of time.
Let see another example. AUDUSD Daily chart
You can see that price move from the top @ 0.88620 to as low as 0.76545 before trying to go
up. This is a down trend.