Learning about the candlestick can give you basic understanding about the chat and why it forms, making your TA journey an easy step by step one
In the financial market, traders and brokers use a number of analysis tools, graphs and stock charts to highlight projections and patterns in day trading. One such tool that is commonly used is a candlestick chart ( this is simply a chat made up of Candlesticks).
It is popular in trading because they offer a wide range of trading information and their design makes them easy to read and interpret.
This article covers all the basics to help you gain understanding about candlesticks
What is a candlestick?
A candlestick is a way of displaying information about an asset’s price movement., learning how to understand a candlestick chart’s meaning is simple as It has three basic features:
* The body, which represents the open-to-close range
* The wick, or shadow, that indicates the high and low for your chosen time frame
* The colour, which reveals the direction of market movement – a green (or white) body indicates a price increase, while a red (or black) body shows a price decrease
When the closing price is higher than the opening price, it is called a Bullish Candlestick. If the closing price is lower than the opening price, it is known as a Bearish Candlestick. The upper and lower shadows of the candlestick mark the highest and lowest price during the chosen time period (one minute, 60 minutes, one day etc.)
Over time, individual candlesticks form patterns that traders can use to recognise major support and resistance levels. There are a great many candlestick patterns that indicate an opportunity within a market – some provide insight into the balance between buying and selling pressures, while others identify continuation patterns or market indecision.
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