What is a Candlestick?

  • The hollow or filled portion of the candlestick is called “the body” (also referred to as “the real body”).
  • The long thin lines above the body represent upper shadow/wick and the lower thin line below the body is called lower shadow/wick.
  • The High is marked as top of the Upper Shadow and low is marked as the low of the lower shadow.
  • If the opening price is lower than the closing price,the body is hollow and represent bullish sentiment.
  • If the closing is lower than the opening price,the body is filled and represent bearish sentiment.

A candle doesn’t always have lower or upper shadow. It also doesn’t need to have body(In cases the open/close prices are same).

The main important point is that candles are more visually appealing compared to point and figure charts and if you combine multiple candles ,they can very well predict the underlying trend.

Simplest example would be multiple filled body candles in sequence represent selling pressure which in turn signifies higher supply causing lower prices while multiple hollow candles in sequence represent buying pressure which in turn signifies higher demand causing increase in prices.

Time is your friend,impulse is your enemy.

Jake Bogle

9 thoughts on “What is a Candlestick?

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