Candlestick
a.k.a. Japanese candlestick, Candle
A chart bar that shows a period's open, high, low and close price: a fat body for open-to-close and thin wicks for the extremes.
A candlestick sums up a slice of time, say one hour, in a single shape. The body runs from the open to the close. The thin wicks (or shadows) poke out to the highest and lowest prices reached.
If the close is above the open, the candle is usually green or hollow: a bullish win for the buyers. If the close is below the open, it is usually red or filled: a bearish win for the sellers. Long wicks show where one side charged in and got shoved back.
String candles together and you get a chart that reveals momentum, hesitation and turning points. That is the raw material of technical analysis.
Reading one hourly candle
- Open 1.0850, high 1.0890, low 1.0835, close 1.0880.
- Close is above open, so it is a bullish candle.
- Body: 1.0880 − 1.0850 = 30 pips. Upper wick: 10 pips. Lower wick: 15 pips.
Bottom line: Sellers pushed price down 15 pips early, buyers stormed back and won the hour by 30.
Reading one candle in isolation. A candle means much more next to its neighbours and near key support or resistance.
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