Candlestick A charting method used to display ope

Candlestick

A charting method used to display open, high, low and close prices for a security, Candlesticks were invented by a 17th century Japanese rice broker, Munehisa Homma, who was one of the first Japanese traders to use price history to predict future prices. His trading theories and principles evolved into the candlestick charting techniques used today. A candlestick uses the top and bottom of its bar to indicate high and low prices of the time frame indicated. The bar is referred to as a "real body" and connects the opening and closing prices. The real body shows the opening and closing prices with a clear, or a dark, rectangle. When the rectangle or real body is clear, it means that the stock closed above its opening price. When the real body is dark, it means that the stock closed below its opening price. The bars that extends above and below the real body are called the upper shadow and lower shadow respectively.

Trading Considerations

Candlestick patterns can be used alone, but are extremely powerful when used in conjunction with other charting indicators.