How to Read Candlestick Chart
Candlestick charting originated centuries ago among Japanese rice traders, but has only become popularized in technical analysis in the West in recent years. It is displayed in figures, which give a strong visual understand of price data and allow an easy comparison of individual periods of asset prices and assessment of trend.
Each candlestick is composed of a vertically standing rectangle and/or vertical lines. The rectangle, known as body. indicates the open and close of a day or trading periods. The body of a candlestick may be a black or white, dependent upon the relationship of the open and close to each other. A white body indicates that the asset price at the close of the day was higher than it was when it opened. A black body signifies a closing price lower than the price at the opening of the day. The lines, often called shadows, show the high and low of the day.
The lengths of each candlestick's body and shadows show the range of trading in a day and give a view of each day relative to preceding and follow ones. Patterns of candlesticks, sometimes called constellations, maybe interpreted as an indication of human trading activity. Trader's interest in charting patterns of consistency in this activity may have given the prognostic application of candlesticks its reliability, as it quickly became one of the most widely used tools of technical analysis.
Candlestick charting originated centuries ago among Japanese rice traders, but has only become popularized in technical analysis in the West in recent years. It is displayed in figures, which give a strong visual understand of price data and allow an easy comparison of individual periods of asset prices and assessment of trend.
Each candlestick is composed of a vertically standing rectangle and/or vertical lines. The rectangle, known as body. indicates the open and close of a day or trading periods. The body of a candlestick may be a black or white, dependent upon the relationship of the open and close to each other. A white body indicates that the asset price at the close of the day was higher than it was when it opened. A black body signifies a closing price lower than the price at the opening of the day. The lines, often called shadows, show the high and low of the day.
The lengths of each candlestick's body and shadows show the range of trading in a day and give a view of each day relative to preceding and follow ones. Patterns of candlesticks, sometimes called constellations, maybe interpreted as an indication of human trading activity. Trader's interest in charting patterns of consistency in this activity may have given the prognostic application of candlesticks its reliability, as it quickly became one of the most widely used tools of technical analysis.
