Learn Candlestick analysis

Candlestick

Candlestick charts provide visual insight to current market psychology. A candlestick displays the open, high, low, and closing prices in a format similar to a modern-day bar-chart, but in a manner that extenuates the relationship between the opening and closing prices. Candlesticks don’t involve any calculations. Each candlestick represents one period (e.g., minute, hour, day) of data.

One cannot ignore that investor’s psychologically driven forces of fear; greed and hope greatly influence the stock prices. The overall market psychology can be tracked through candlestick analysis. More than just a method of pattern recognition, candlestick analysis shows the interaction between buyers and sellers. A green candlestick indicates the opening price of the session is below the closing price, and a red candlestick shows the opening price of the session is above the closing price. The shadow at top and bottom indicates the high and low for the session.

candlestick

Japanese candlesticks offer a quick picture into the psychology of short term trading, studying the effect, not the cause. Therefore if you combine candlestick analysis with other technical analysis tools, candlestick pattern analysis can be a very useful way to select entry and exit points.

  • Single candlestick patterns
    • Doji
    • Spinning Top
    • Marubuzo
      • Bullish Marubuzo
      • Bearish Marubuzo
    • Hammer
    • Hanging Man
    • Shooting Star
  • Multiple candlestick patterns
    • Engulfing Pattern
      • Bullish Engulfing
      • Bearish Engulfing
    • Piercing Pattern
    • Dark Cloud Cover
    • Harami Pattern
      • Bullish Harami
      • Bearish Harami
    • Candle Gaps
    • Morning Star
    • Evening Star
    • Three White Soldiers
    • Three Black Crows

Author: Sulthan

Author, Blogger and Assistant Professor in Finance

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