Japanese Candlesticks have been around for centuries. In use since the early 1700's Japanese candlesticks were first used to trade the rice markets. Over the last 400 years of course they have become popular to many including stock and forex traders.
Candlestick charts show a trend just like any other chart but with more detail. They use a value system of open, high, low and close. There are 2 basic parts to a candlestick; the body, that is a rectangle shape either filled or hollow, and the shadows that are simply lines above and below the body.
A high is marked by the top of the upper shadow or a wick. It indicates the highest point of the day in trading. The low is marked by the bottom of the lower shadow. If a security closes higher than it opened, then a hollow body is drawn. The top line of the body itself would indicate the close and the bottom line of the body would indicate the open. If a security closes lower than the opening price, then a filled body is drawn with the top line indicating the opening and the lower one indicating the close. (See below.) [I:0:J]
Candlestick patterns are not only more easy to read, they are also more intuitive once you get the hang of reading them. You see there are patterns with candlesticks you will soon learn to easily recognize, combine this with the intuitiveness and you have yourself a method for assessing price far superior to any other.
There are different sizes of bodies as well. A long hollow body indicates there was a large advance in pricing between the open and close. A long filled body indicates the closing price was much lower than the opening. In return and in keeping with the same analogy, a short hollow body would indicate a small rise in pricing between open and close and a short filled body would indicate a small drop in pricing between open and close.
There are also candlesticks with full bodies and no wicks/shadows. These should be noted and have a name they are called Marubozu's. The can be black or white (full / empty) and they appear when the open and close of the session are equal to the high and low. With the white/empty candlestick your high is equal to your close. With the black/full your low is equal to your close.
A long or short shadow with a short body are called spinning tops. Spinning tops represent indecision. The short body indicates that there was little change in the trading and the long shadows indicate there was a lot of activity with both bulls and bears. However it also indicates that neither buyer nor seller could get the upper hand, resulting in somewhat of a standoff. [I:1:J] - 16928
Candlestick charts show a trend just like any other chart but with more detail. They use a value system of open, high, low and close. There are 2 basic parts to a candlestick; the body, that is a rectangle shape either filled or hollow, and the shadows that are simply lines above and below the body.
A high is marked by the top of the upper shadow or a wick. It indicates the highest point of the day in trading. The low is marked by the bottom of the lower shadow. If a security closes higher than it opened, then a hollow body is drawn. The top line of the body itself would indicate the close and the bottom line of the body would indicate the open. If a security closes lower than the opening price, then a filled body is drawn with the top line indicating the opening and the lower one indicating the close. (See below.) [I:0:J]
Candlestick patterns are not only more easy to read, they are also more intuitive once you get the hang of reading them. You see there are patterns with candlesticks you will soon learn to easily recognize, combine this with the intuitiveness and you have yourself a method for assessing price far superior to any other.
There are different sizes of bodies as well. A long hollow body indicates there was a large advance in pricing between the open and close. A long filled body indicates the closing price was much lower than the opening. In return and in keeping with the same analogy, a short hollow body would indicate a small rise in pricing between open and close and a short filled body would indicate a small drop in pricing between open and close.
There are also candlesticks with full bodies and no wicks/shadows. These should be noted and have a name they are called Marubozu's. The can be black or white (full / empty) and they appear when the open and close of the session are equal to the high and low. With the white/empty candlestick your high is equal to your close. With the black/full your low is equal to your close.
A long or short shadow with a short body are called spinning tops. Spinning tops represent indecision. The short body indicates that there was little change in the trading and the long shadows indicate there was a lot of activity with both bulls and bears. However it also indicates that neither buyer nor seller could get the upper hand, resulting in somewhat of a standoff. [I:1:J] - 16928
About the Author:
Candlestick patterns are very telling. Once you start using them you will look at any other chart and wonder how you did it without a candlestick chart. Candlestick charts are easier on the eyes, market sentiment pops out at you instantly, and the entireprocess of reviewing charts becomes 10 times easier. To download our masters course and flash-cards visit us at http://www.candlestickgenius.com
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