Introduction to Candlesticks


By March 17, 2016 December 1st, 2018 No Comments

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Lighting the Way

The first thing that you have to know about the candlestick, and about any type of stock chart pattern, is that they are meant to be tools for making more educated predictions about what is going to happen in the future of a certain stock. Some people choose to base their predictions on social demand and perceived value, while technical analysts choose to watch a stocks trends and patterns over time, and use that information to guide their decisions to buy and sell at certain times. .

The candlestick is a modification of the traditional bar chart, which simply indicates increases or decreases in the price of a certain stock. With this chart pattern, however, you get a little bit more information because the way that it is constructed allows you to see a relationship between opening and closing prices for a certain stock on a certain day. Technical analysts use the candlestick price chart as a way to observe the high, low, open, and close for a security each day over a specified period of time. The body of the candlestick can be solid or hollow, and thin lines, known as shadows, tails or wicks, are often attached at the top or bottom of the body show the range of prices traded during that specific period.