Candlestick Chart
A candlestick chart is a popular chart used in Technical Analysis to predict price movements of equity or currency price. This style of charting is very popular due to the level of ease in reading and understanding the graphs. This chart is said to have been developed in the 18th century by Japanese rice trader. They used candlestick chart to predict future demand.
Basically the candlestick chart gave an overview of open, high, low, and close market prices over a certain period. The basic shape of candlestick is shown at image below:
Candlesticks are usually composed of the body (black or white), an upper and a lower shadow. The shadow illustrates the highest and lowest traded prices of a stock. The body illustrates the opening and closing trades. If the stock closed higher than it opened, the body is white, with the opening price at the bottom of the body and the closing price at the top. If the stock closed lower than it opened, the body is black. A candlestick need not have either a body or a shadow. Sometimes cndlestick is displayed using different color, like blue/green and red.
Candlestick charts are a visual aid for decision making in trading. That's why you need to be familiar with several candlestick patterns. Here they are:
CONTINUITY PATTERN
1. White Candlestick & Black Candlestick
2. Marubozu White & Marubozu Black
3. Three White Soldiers & Three Black Crows
NEUTRAL PATTERN
1. Spinning Top White & Spinning Top Black
REVERSAL PATTERN
1. Doji
2. Hammer & Inverted Hammer
3. Hanging Man & Shooting Star
4. Morning Star
5. Evening Star
6. Morning Doji Star
7.
Evening Doji Star
8. Bullish Abandoned Baby
9. Bearish Abandoned Baby
10. Bullish Harami
11. Bearish Harami
12. Bullish Engulfing
13. Bearish Engulfing
14. Piercing
15.
Dark Cloud Cover
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