BASICS OF CANDLESTICKS

BASICS OF CANDLESTICKS

JAPANESE CANDLESTICK

Japanese candlestick is a very useful tool for analyzing stocks. Candlesticks gives us the same information as a bar chart, however they are easier to look at and more visual.

Here are the reasons why Japanese Candlestick is better than other charts:

 Easier to see

 More visual

 Less confusing

 Reliable patterns

 Easily spot opportunities

Candlestick charting technique are now widely used by traders in the stock, futures, forex, commodities and options market to predict market psychology and trend. Candlestick charts clearly display the open, high, low, and closing prices much clearer than the modern-day bar-chart.

Candlestick charts are flexible, because candlestick charts can be used alone or in combination with other technical analysis techniques. Candlestick charting techniques provide an extra dimension of analysis.

JAPANESE CANDLESTICK

Japanese candlestick is a very useful tool for analyzing stocks. Candl

esticks gives us the same information as a bar chart, however they are easier to look at and more visual.

Here are the reasons why Japanese Candlestick is better than other charts:

 Easier to see

 More visual

 Less confusing

 Reliable patterns

 Easily spot opportunities

Candlestick charting technique are now widely used by traders in the stock, futures, forex, commodities and options market to predict market psychology and trend. Candlestick charts clearly display the open, high, low, and closing prices much clearer than the modern-day bar-chart.

Candlestick charts are flexible, because candlestick charts can be used alone or in combination with other technical analysis techniques. Candlestick charting techniques provide an extra dimension of analysis.

THE ANATOMY OF THE CANDLESTICKS

The black real body means that the close was lower than the opening.

The white real body means that the close was higher than the opening.

The rectangular portion of the candlestick is called the real body.

Real Body: The difference between the open and close; colored portion of the candlestick

Upper Shadow : The difference between the top of the real body and high of the day is the upper shadow (or upper wick)

Lower Shadow : The difference between the bottom of the real body and the low of the day is the lower shadow (or lower wick)

The height of the real body is the range between the day's open price and the day's close price. When this body is black, it means that the closing price was lower than the opening price. When the closing price is higher than the opening, the body is white

If the price closed higher than it opened, the candlestick would be white. If the price closed lower than it opened, the candlestick would be black.

The long, dark, filled-in real body represents a weak (bearish) close, while a long open, white-colored real body represents a strong (bullish) close. At a glance, notice how much easier it is with candlesticks to determine if the closing price was higher or lower than the opening price.

LONG WHITE CANDLESTICK (BULLISH)

Explanation

White candlestick is formed When the close is higher than the open

The long day represents a large price move from open to close. Long represents the length of the candle body.

Long describes the length of the candlestick body, the difference between the open price and the close price,. A long day represents a large price movement for the day. In other words, the open price and close price were considerably different.

The real body of the Long White Candlestick has a relatively longer length relative to other candlesticks on the chart.

The sizes of the upper and lower shadows are not important.

The Long White Candlestick is a signal indicating strong buying pressure.

The Long White Candlestick shows that the prices advanced significantly from open to close during the day under strong buying pressure and buyers were aggressive.

If a Long White Candlestick is seen after a long and significant rally, it can point out to excessive bullishness in the market that says that prices are at dangerously high levels.

The Long White Candlestick pattern indicates that the closing price is further above the opening price, with the price advancing significantly from open to close during the day Long.

LONG BLACK CANDLESTICK (BEARISH)

Explanation

The Long Black Candlestick represents strong selling pressure in the market.

Black Candlestick shows that prices declined from open to close during the day , with sellers controlling the trade throughout this process

The sizes of the upper and lower shadows are not important.

A longer black candlestick means that the close is further below the opening price. The prices decline significantly following the opening showing that sellers were aggressive.

A Long Black Candlestick may warn a turning point or mark a future resistance level after a long rally.

Long Black Candlestick pattern has low reliability reflecting only one day's trading.

and may both be pointing out to continuation or reversal. Thus it requires consideration of other candlesticks to confirm a trend.