Basics of Candlestick Chart

What is a Candlestick Chart?

Candlestick chart or Japanese Candlestick is a visual financial chart used to describe price movements of a security, derivative or a currency.

Over time, groups of daily candlesticks fall into recognizable patterns.

Key Features of a Candlestick Chart:

• More Visual
• Real Bodies
• Colour Coding Price Bars

Candlestick Basics:

“Green” candle represents a Bullish Marubozu. Here, there is no shadow formed, so there is no shadow formed (More on that in the coming posts) and hence the market is complete bullish.

The vice-versa is depicted in the red “Bearish Marubozu”.

Candlestick Marubozu

How does a Candlestick Chart look like:

Candlestick Chart

What is a Doji and how do you use it in your analysis?

Doji Pattern

It is important to emphasize that the Doji pattern does not mean reversal, it means indecision. Doji’s are often found during periods of resting after a significant move higher or lower; the market, after resting, then continues on its way. Nevertheless, a Doji pattern could be interpreted as a sign that a prior trend is losing its strength, and taking some profits might be well advised.

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