Candlestick

Candlestick, also known as Japanese candlestick, is a visual representation of price movements in financial charts. It originated in Japan in the 18th century and has become widely used in technical analysis.

A candlestick chart consists of individual “candles” that represent a specific time period, such as 1 minute, 5 minutes, 1 hour, or 1 day. Each candle has a rectangular body and two thin lines called “wicks” or “shadows” that extend from the top and bottom of the body.

The body of the candle represents the price range between the opening and closing prices for that time period. If the closing price is higher than the opening price, the body is typically filled or colored, often green or white, indicating a bullish or upward movement. Conversely, if the closing price is lower than the opening price, the body is usually hollow or colored, often red or black, indicating a bearish or downward movement.

The wicks or shadows represent the price range between the highest and lowest prices during that time period. The upper wick extends from the top of the body and represents the high price, while the lower wick extends from the bottom of the body and represents the low price.

Candlestick patterns provide valuable information about market sentiment and potential price reversals. Some common candlestick patterns include doji, hammer, shooting star, engulfing, and spinning top. These patterns can indicate bullish or bearish reversals, trend continuations, or indecision in the market.

Candlestick charts are widely used by traders and analysts to analyze price trends, identify support and resistance levels, and make trading decisions. They provide a visual representation of price movements, allowing traders to quickly assess market conditions and make informed predictions about future price movements.

In conclusion, candlestick charts are a popular tool in technical analysis that visually represent price movements in financial markets. Each candlestick provides information about the opening, closing, high, and low prices for a specific time period. Candlestick patterns can help traders identify potential market reversals and make informed trading decisions.