Candlestick Chart

Candlestick chart is one of the most powerful charts which clearly indicates the psychology of the stock prices. Within one candlestick, it shows below important information:

1. Open Price

2. Close Price

3. Highest Price

4. Lowest Price

5. Colour of body
– The area between open price and close price is known as body.
– White body indicates price opens lower, closes higher.
– Red/Black body indicates price opens higher, closes lower.

6. Upper shadow
– For white candlestick, it is area between highest price and close price.
– For red/black candlestick, it is the area between highest price and open price.

7. Lower shadow
– For white candlestick, it is area between lowest price and open price.
– For red/black candlestick, it is the area between lowest price and close price.

Example:

Chart courtesy of StockCharts.com

Why Is It useful?

Indication Of Whether Bull or Bear Is In Charge

Example:

Chart courtesy of StockCharts.com

Indication Of Potential Trend Reversal

Example:

Chart courtesy of StockCharts.com

Indication Of Support And Resistance

Example

Chart courtesy of StockCharts.com

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