26/09/2022
TECHNICAL ANALYSIS
TECHNICAL ANALYSIS BASIC EDUCATION
Candlestick Definition
By
ADAM HAYES
Updated July 29, 2020
Reviewed by
SOMER ANDERSON
Fact checked by
KATRINA MUNICHIELLO
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Investopedia / Ryan Oakley
What Is A Candlestick?
A candlestick is a type of price chart used in technical analysis that displays the high, low, open, and closing prices of a security for a specific period. It originated from Japanese rice merchants and traders to track market prices and daily momentum hundreds of years before becoming popularized in the United States. The wide part of the candlestick is called the "real body" and tells investors whether the closing price was higher or lower than the opening price (black/red if the stock closed lower, white/green if the stock closed higher).
KEY TAKEAWAYS
Candlestick charts display the high, low, open, and closing prices of a security for a specific period.
Candlesticks originated from Japanese rice merchants and traders to track market prices and daily momentum hundreds of years before becoming popularized in the United States.
Candlesticks can be used by traders looking for chart patterns.
Candlestick Charts
The Basics Of A Candlestick
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Image by Julie Bang ยฉ Investopedia 2020
The candlestick's shadows show the day's high and low and how they compare to the open and close. A candlestick's shape varies based on the relationship between the day's high, low, opening and closing prices.
Candlesticks reflect the impact of investor sentiment on security prices and are used by technical analysts to determine when to enter and exit trades. Candlestick charting is based on a technique developed in Japan in the 1700s for tracking the price of rice. Candlesticks are a suitable technique for trading any liquid financial asset such as stocks, foreign exchange and futures.
Long white/green candlesticks indicate there is strong buying pressure; this typically indicates price is bullish. However, they should be looked at
