Candlestick Technical Analysis : An Introduction
The Japanese candlestick, hereafter simply referred to as candlestick or candle, is a very effective way to convey the open, high, low, close price points for the period in question, which may be minute, hour, day, week, etc. as supported by the charting software.
The body of the candlestick is defined by the open and close prices. The tails of the candlestick (some call them wicks or shadows) indicate the high and low prices. A color or shading convention is used for the body of the candlestick to convey the up/down direction of the candlestick. An up candle has the closing price higher than the opening price. A down candle has the closing price lower than the opening price. Colors used for the body include red and blue for down candles; green and white for up candles – subject to the convention used in the charting software which may allow user customization.
Visually, candlestick charting is very effective in conveying the up and down periodic movements of the stock price. At a glance, the user is able to see whether a stock closed higher than its opening price (up candle), or vice versa, a stock closed lower than its opening price (down candle). The length of the body as well as the tails show the range of price movement for the stock. And the user is able to follow the progression of candlesticks in successive periods.
There are various candlestick patterns such as doji and hammer (just to cite two from the long list of patterns which may span 1, 2, 3 or even more periods) that are used in candlestick technical analysis where significant conclusions are attached to each pattern.
More you might like
Applicability of Stock Market Products and Services
This article provokes your thoughts on the applicability of stock market advice, products and services as it relates to your stock market trading (success).
Candlestick Technical Analysis : An Introduction
This article provides an introduction to Japanese candlesticks – what they are, how they are used in charting and the technical analysis of candlestick patterns.
Paper Trading Preparation for Real Trading
This article covers the topic of paper trading as preparation for trading with real money. Failure in paper trading is a sign that the person should not partake in real trading. Success in paper trading does not necessarily mean a person will succeed in real trading.
React to Technical Analysis Indicators to Trade the Rise and Drop in Stock Prices
This article examines the approach of trading stock price cycles as a means to achieve repeated trading profits in short-term trading. Take what the stock markets will give you.
Trading Research in Motion post Q1/2009
This article covers my observations on the trading of Research in Motion. With its huge rise leading up to and following the latest earnings announcement, where is the stock headed in the near term?
