All About Candlestick Charts

Japan was the first country in the world to use candlestick charts for over a century before the two other forms of charts were developed in other regions of the world: point-and-figure and bar charts. These types of charts are based on how the feelings of traders affect the market. As a trader, you can make assumptions about certain trends that help you forecast a short-term market trajectory.

About candlestick charts

As far as its elements are concerned, the candlestick chart is not that distinct from the bar chart. It also requires a market’s high, low, open, and close prices throughout the day. The biggest part of the candlestick chart is considered the “real body.” That’s the price range between open and close prices. If it is filled in, it means that the close price is smaller than the open price. When it’s void, it’s vice versa.

The sections below and above the “real body” are considered the “shadows.” They’re showing high and low rates for a day, and they can be long or short.

A comparison with bar charts

Apart from how they appear, there are not many variations between the candlestick charts and the bar charts. They both present the same stuff. The greatest aesthetic difference between them is that the candlestick charts are more vivid and physically impactful.

When it comes to the trends of a candlestick chart, produced by price fluctuations, they are either bullish or bearish. A bullish trend suggests a price that is expected to rise. A bearish one indicates a price that is expected to decline.

Conversely, traders can never take these behaviors as promises because that is not their intent. There are many patterns to keep a watch on, but these two major trends are the most important to remember.

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