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.

candlesticks are formed using the open, high, low and close of the chosen time frame.

Components of a Candlestick

Body: The thick part of the candlestick, which represents the range between the opening and closing prices.

• If the close is above the open, we can say that the candlestick is bullish which means that the market is rising in this period of time. Bullish candlesticks are always displayed as white candlestick
• If the close is below the open, we can say that the candlestick is bearish which indicates that the market is falling in this session. Bearish candles are always displayed as black candlesticks .

You can find different colors used to differentiate between bullish and bearish candlesticks.

• The filled part of the candlestick is called the real body.
• The thin lines poking above and below the body are called shadows.
• The top of the upper shadow is the high
• The bottom of the lower shadow is the low.

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.

Long Vs Short

Long bodies refer to strong buying or selling pressure, if there is a candlestick in which the close is above the open with a long body, this indicates that buyers are stronger and they are taking control of the
market during this period of time.

if there is a bearish candlestick in which the open is above the close with a long body, this means that the selling pressure controls the market during this chosen time frame.

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 Shadows

The upper and lower shadows give us important information about the trading session.

• Upper shadows signify the session high
• Lower shadows signify the session low

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.