Candlestick charts are a technical tool that pack data for multiple time frames into Steve Nison brought candlestick patterns to the Western world in his popular book, "Japanese Candlestick Charting Techniques. Learn how to read a candlestick chart, as well as spot candlestick patterns that aid in analyzing price direction. Usage. Candlestick charts are a visual aid for decision making in stock, foreign exchange, commodity, and option trading. For example, when the bar is white and high relative to other time periods, it means buyers are very bullish.‎Candlestick pattern · ‎Hammer · ‎Three black crows · ‎Chart pattern.


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An analogy to this battle can be made between two football teams, which we can also call the Bulls and the Bears. The bottom intra-session low of the candlestick represents a touchdown for the Bears and the top intra-session high a touchdown for the Bulls. The closer the close is to the high, the closer the Bulls are to a touchdown.

The closer the close is to the low, the closer the Bears are using candlestick charting a touchdown.

While there are many variations, I have narrowed the field to 6 types of games or candlesticks: Long white candlesticks indicate that the Bulls controlled the ball trading for most of the game. Long black using candlestick charting indicate that the Bears controlled the ball trading for most of the game.

Small using candlestick charting indicate that neither team could move the ball and prices finished about where they started. A long lower shadow indicates that the Bears controlled the ball for part of the game, but lost control by the end and the Bulls made an impressive comeback.

The 5 Most Powerful Candlestick Patterns

A long upper shadow indicates that the Bulls controlled the ball for part of the game, but lost control by the end and the Bears made an impressive comeback. A long upper and lower shadow indicates that the both the Bears and the Bulls had their moments during the game, but neither could using candlestick charting the other away, resulting in a standoff.

What Candlesticks Don't Tell You Candlesticks do not reflect the sequence of events between the open and close, only the relationship between the open and the close. The high and the low are obvious and indisputable, but candlesticks and bar charts cannot tell us which came first.

With a long white candlestick, the assumption is that prices advanced most of the session. The first sequence shows two small moves and one large move: The second sequence shows three rather sharp using candlestick charting The first sequence portrays strong, sustained buying pressure, and would be considered more bullish.

The second sequence reflects more volatility and some selling pressure.

Introduction to Candlesticks [ChartSchool]

These are just two examples, and there are hundreds of potential combinations that could result in the same candlestick. Candlesticks still offer valuable information on the relative positions of the open, high, low and close.

However, the trading activity that forms a particular candlestick can vary. Prior Trend Using candlestick charting his book, Candlestick Charting ExplainedGreg Morris notes that for a pattern to qualify as a reversal pattern, there should be a prior trend to reverse.

Candlestick Charting: What Is It?

Bullish reversals require a preceding downtrend and bearish reversals require using candlestick charting prior uptrend. A downtrend might exist as long as the security was trading below its down trend line, below using candlestick charting previous reaction high or below a specific moving average.

The length and duration will depend on individual preferences. However, because candlesticks are short-term in nature, it is usually best to consider the last weeks of price action.

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  • Candlestick Charting: What Is It? | Investopedia
  • Introduction to Candlesticks
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Candlestick Positioning Star Position A candlestick that gaps away from the previous using candlestick charting is said to be in star position. The first candlestick usually has a large real body, but not always, and the second candlestick in star position has a small real body.


Depending on the previous candlestick, the star position candlestick gaps up or down and appears isolated from previous price action.

The two candlesticks can be any combination of white and black. Dojihammersshooting stars and spinning tops have small real bodies, and can form in using candlestick charting star position.