Traditional charts compared with candlestick charts
The majority of traders consider the Japanese candlestick charts are an easier system to interpret and more visually appealing than other types of charting systems. Each type of candlestick provides an easy to understand picture about the price movement during the period in question. The interpretation of the candlestick will depend on the open and close price during that specific period of time. Candlestick analysis is part of most trading systems.
– Hollow or White Candlesticks:
In those candlesticks, the closing price is higher than the opening price, which indicates buying pressure.
– Filled or Black Candlesticks:
In those candlesticks, the closing price is lower than the opening price, which indicates selling pressure.
Long versus Short Bodies
The long and white candlesticks show strong buying pressure, similarly the long black candlesticks show strong selling pressure. Conversely, short candlesticks represent less price action or movement, or in other words, more price consolidation.
Marubozu Candlesticks are those white or black candlesticks, which do not have any shadows and only contain a body.
– White candlesticks:
The opening price is the lowest price and the closing price is the highest price during that period.
– Black candlesticks:
The opening price is the highest price and the closing price is the lowest price during that period.
Long versus Short shadows
The upper and lower shadows of candlesticks can provide valuable information about the trading session. The upper shadow represent the point where the highest price has been reached during that period, and the lower shadow represent the point where the lowest price has been reached during that period or trading session. Candlesticks with short shadows indicate that most prices offered during that session were limited to the open and close prices, whereas long shadows indicates that prices offered exceeded the opening and close price of that period or trading session.