Japanese Candlestick Basics

Candlesticks are the most basic form of chart reading. The Japanese started using candlesticks in the 17th Century. They are very simple to use but very rich in interpretation. Many Price Action Technical Analysts or traders use only candlesticks to trade, as indicators are latent to price movements.

There are two types of candlesticks:
Bullish: When the closing price is higher than the opening price. Prices have moved higher.
Bearish: When the closing price is lower than the opening price. Prices have moved lower.

Candlestick components

Upper shadow: is the vertical line above the body f the candle. Goes from high to close (bullish candle) or open (bearish candle)
Real body: is the difference between the open and the close
Lower shadow: is the vertical line below the body. It goes from the low of the candle to the close (bearish candle) or open (bullish candle).

Candlestick Patterns
In the candlesticks you can see human emotions. There are many candlesticks, and are either reversal of continuation patterns, greed or fear.

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