Candlestick Charts in detail
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Dating as far back as the 17th century, the Japanese began using technical analysis to trade on rice. Hence, the Japanese Candlesticks are commonly in use today.
The data relayed from the candlestick includes the highs, lows, and open and close prices.
The ‘hollow’ and the ‘coloured’ portions are called the body. The long thin lines above and below the ‘body’ represent the high or low ranges and are also referred to as either shadows, wicks or tails.
The vertical line at the top of the body tells you the high and close price, while the line at the bottom of the graph indicates the low and the low’s close price.
The colours of the candle body can vary from broker to broker.
If the open is at the top and the close is at the bottom, it will indicate a bear candle meaning there were more sellers than buyers from the time the candle opened till it closed.
Vice versa, if the close is at the top and the open at the bottom, it will indicate a bear candle meaning there were more buyers than sellers from the time the candle opened till it closed.
Since we are going to use a candlestick chart, let’s get more familiar with candlestick and its forms and patterns in our next lesson.
