What Is a Candlestick Chart?
A candlestick chart is a tool used in financial analysis to show the highest, lowest, opening, and closing prices of a stock or other security for a specific time period. Each “candlestick” on the chart shows one time period, like a day or an hour, and visually represents how the price moved during that time.
Components of a Candlestick
Body: The thick part of the candlestick, which represents the range between the opening and closing prices.
- Bullish(green/white) candle: The closing price is higher than the opening price.
- Bearish(red/black) candle: The closing price is lower than the opening price.
Wicks(Shadows): The thin lines above and below the body, indicating the highest and lowest prices during the period.
- Upper wick: The high price for the period.
- Lower wick: The low price for the period.
Description
Long Body: Indicates strong buying or selling pressure. A long green body shows strong buying pressure, while a long red body shows strong selling pressure.
Short Body: Indicates less price movement and potential indecision in the market.
Long Wicks: Suggest that prices moved significantly during the period but were pushed back to the opening or closing price level.
No Wicks: Suggests that the opening or closing price was also the high or low price for the period.
