Understanding Basic Candlestick Charts
By 5 Circles Pvt Ltd | Updated July 30, 2024 Reviewed by Vaishnavi Dixit Candlestick charts have been a fundamental tool for traders for centuries. Originating in Japan in the 1700s, these charts were developed by a rice trader named Homma, who recognized that market emotions significantly influenced the price movements of rice. Today, candlestick charts remain crucial for modern traders, offering a visual representation of price movements and helping to forecast short-term price directions. Key Takeaways Candlestick Charts : Show price movements with four key data points—open, close, high, and low. Visual Representation : Colors indicate price changes, with green or white showing price increases and red or black indicating price decreases. Trading Decisions : Patterns in candlestick charts help traders predict future price movements. Candlestick Components A single candlestick provides a wealth of information: Real Body : The wide part of the candlestick showing the price range betwee...