Candlesticks
Candlestick charting is a form of technical analysis whereby the price action of a stock gets represented by an image of a bar with upper and/or lower wicks, somewhat resembling a candlestick.
A candlestick represents the open, close, high, and low of a stock that help investors/traders gather data of a stock’s price action. A candlestick has a short or long bar called the real body that gets filled (black) or unfilled (white). A black candlestick signifies that the stock’s price closed lower than its opening price (stock went down within a period) whereas a white candlestick signifies that the stock’s price closed higher than its opening price (stock went up within a period). On a candlestick, there might be short or long wicks called shadows. These shadows mark the highest or lowest price of the stock within the period.
Through the analysis of a candlestick or a series of candlesticks, investors/traders can infer the possible succeeding movement of the stock’s price action, which is important to determine good entry or exit points. It is essential for any investor or trader to be familiarized with candlestick charting because it is one of the most basic principles of Technical Analysis. The other alternatives of candlestick charts are line charts, bar charts, and point and figure charts.