Japanese Candlesticks Step by Step
Japanese candlesticks are basically an ancient tradition of the Chinese for keeping tabs on the rice markets. Considered by many (safe to say at this point.) to be the best way to view an asses price action. Japanese candlestick have become popular in just about every liquid market.
Japanese candlestick charts display market sentiment like no other form of charting can. With candlestick charts you have basically 2 moving parts. (If you will.) The real body, can be full or hallow, and the wicks or shadows can be long or short, or gone - either way, together you get a nice picture of price action today, or over a period of time.
A high is marked by the top of the upper shadow or a wick. It indicates the highest point of the day in trading. The low is marked by the bottom of the lower shadow. If a security closes higher than it opened, then a hollow body is drawn. The top line of the body itself would indicate the close and the bottom line of the body would indicate the open. If a security closes lower than the opening price, then a filled body is drawn with the top line indicating the opening and the lower one indicating the close. (See below.) [I:0:J]
Candlestick charts are considered more eye appealing and easier to understand than the ordinary bar or line chart. They are more intuitive and easier to identify immediately, and they also show price action relative to the past. (Best left for another article.)
Different body sizes represent the distance between open and close. A longer hallow body represents a nice bullish candlestick where the close is higher than the open. A longer filled or black body represents a nice bearish session / day where the close is much lower than the open. In the flip side short bodies represent a close and open relatively close to each other.
When you have a body with no shadows its called a Marubozu. I can be black or white in which case its a "black Marubozu or a white Marobozu. In each case the open and close are equal to the high and the low. With the black the open is equal to the high and the close is equal to the low. The white would be the open is equal to the low and the close is equal to the high.
A long or short shadow with a short body are called spinning tops. Spinning tops represent indecision. The short body indicates that there was little change in the trading and the long shadows indicate there was a lot of activity with both bulls and bears. However it also indicates that neither buyer nor seller could get the upper hand, resulting in somewhat of a standoff. [I:1:J] - 16931
Japanese candlestick charts display market sentiment like no other form of charting can. With candlestick charts you have basically 2 moving parts. (If you will.) The real body, can be full or hallow, and the wicks or shadows can be long or short, or gone - either way, together you get a nice picture of price action today, or over a period of time.
A high is marked by the top of the upper shadow or a wick. It indicates the highest point of the day in trading. The low is marked by the bottom of the lower shadow. If a security closes higher than it opened, then a hollow body is drawn. The top line of the body itself would indicate the close and the bottom line of the body would indicate the open. If a security closes lower than the opening price, then a filled body is drawn with the top line indicating the opening and the lower one indicating the close. (See below.) [I:0:J]
Candlestick charts are considered more eye appealing and easier to understand than the ordinary bar or line chart. They are more intuitive and easier to identify immediately, and they also show price action relative to the past. (Best left for another article.)
Different body sizes represent the distance between open and close. A longer hallow body represents a nice bullish candlestick where the close is higher than the open. A longer filled or black body represents a nice bearish session / day where the close is much lower than the open. In the flip side short bodies represent a close and open relatively close to each other.
When you have a body with no shadows its called a Marubozu. I can be black or white in which case its a "black Marubozu or a white Marobozu. In each case the open and close are equal to the high and the low. With the black the open is equal to the high and the close is equal to the low. The white would be the open is equal to the low and the close is equal to the high.
A long or short shadow with a short body are called spinning tops. Spinning tops represent indecision. The short body indicates that there was little change in the trading and the long shadows indicate there was a lot of activity with both bulls and bears. However it also indicates that neither buyer nor seller could get the upper hand, resulting in somewhat of a standoff. [I:1:J] - 16931
About the Author:
Candlestick patterns are very revealing. Once you start using them you will look at any other chart and wonder how you did it without a candlestick chart. They are easier on the eyes, market sentiment pops out at you immediately, and the overall process of reviewing charts becomes 10 times easier. To download our masters course and flash-cards visit us at http://www.candlestickgenius.com
posted by Edgar at
04:47
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