What is a Candlestick?

Professionally speaking:

A candlestick is a type of price chart used in technical analysis that displays the high, low, open, and closing prices of a security for a specific period. Originating in Japan in the 18th century for tracking rice prices, candlesticks provide a visual representation of price action, offering insights into market sentiment and potential future price movements. Each candlestick represents a single trading period (e.g., one minute, one hour, one day, one week), and its shape and color convey crucial information about the supply and demand dynamics within that period.

Key components of a candlestick include:

• The Body: This rectangular part represents the range between the opening and closing prices.

  • Green/White (Bullish): If the closing price is higher than the opening price, the body is typically colored green or white, indicating that buyers were in control during that period.

  • Red/Black (Bearish): If the closing price is lower than the opening price, the body is typically colored red or black, indicating that sellers were in control.

• The Wicks (or Shadows): These thin lines extending from the top and bottom of the body represent the highest and lowest prices reached during the period.

  • Upper Wick: Shows the highest price traded.

  • Lower Wick: Shows the lowest price traded.

By observing the length of the body and wicks, and the color of the body, traders can quickly gauge the strength of buying or selling pressure, volatility, and potential turning points in the market.

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What is a Candlestick?

Professionally speaking:

A candlestick is a type of price chart used in technical analysis that displays the high, low, open, and closing prices of a security for a specific period. Originating from Japanese rice traders in the 18th century, candlesticks provide a highly visual and intuitive representation of price action, allowing traders to quickly grasp market sentiment and potential price movements within a given timeframe.

Each candlestick is composed of a “body” and “wicks” (or “shadows”).

• The Body: This represents the range between the opening and closing prices.

  • If the closing price is higher than the opening price, the body is typically colored green or white (indicating a bullish or upward movement).

  • If the closing price is lower than the opening price, the body is typically colored red or black (indicating a bearish or downward movement).

• The Wicks (or Shadows): These are the thin lines extending above and below the body.

  • The upper wick indicates the highest price reached during the period.

  • The lower wick indicates the lowest price reached during the period.

By observing the size, color, and position of the body and wicks, traders can infer the strength of buying or selling pressure, volatility, and potential reversals or continuations of trends.