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Where do Candlesticks Come From?
In the 1600s, the Japanese developed a method
of technical analysis to analyze the price of rice contracts. This
technique is called candlestick charting. Candlestick charts are
simply a new way of looking at price; they don't involve any
calculations.
What
do Candlesticks Look Like?
Candlestick charts are much more visually
appealing than a standard two-dimensional bar chart. As in a standard
bar chart, there are four elements necessary to construct a
candlestick chart, the OPEN, HIGH, LOW and CLOSING price for a given
time period.
The body of the candlestick is called the
real body, and represents the range between the open and closing
prices.
A black or filled-in body represents that the
close during that time period was lower than the open, (normally
considered bearish) and when the body is open or white, that means the
close was higher than the open (normally bullish).
The thin vertical line above and/or below the
real body is called the upper/lower shadow, representing the high/low
price extremes for the period (one period of time measures the
duration of selling or buying within the market). As a trader, you can
use any time period you want, time intervals may be a tick chart, 1
min, 5min, 10 min, 1 hour, 4 hour, 1 day,…
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