Candlestick chart

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«The two hardest tests on the spiritual road
- are the patience to wait for the right moment -
and the courage not to be disappointed with what we encounter.»»

(Paulo Cohelo)

Explanation of a candle in a Candlestick chart.
Candlestick analysis is the oldest way of studying price movements and still one of the most used. It can be used together with any other form of technical analysis and in any timeframe. This kind of analysis gives useful and unique indications.

Unlike other kind of graph representations, candlestick chart gives some peculiar configuration that represent in a single graphic form four moments of the session (open, min, max, close). Candlestick are used to understand market movements with a complex picture that is more accurate than a classic bar chart.

Even the candle color in a candlestick chart gives us some information. If the opening level is under the close level, we will have a white body candle, while if the opening is over a close, the body will be painted in black. In a first approximation, we might say that black candles decrease their value, while white ones increase it.

At first candlestick appear full of mysteries and difficult to understand as they appear in many variants. Once we understood how to read them, they allow us to simplify the analysis and make it rather easy, without a huge effort.

Four primary categories

Candlestick might be divided into four primary categories from which all the other derives, including graphic patterns.

1) white candles,
2) black candles,
3) big candles,
4) small candles.

Wbbs candles 2.png
The four basic kind of candlestick.

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