Candlestick Chart Technical Analysis
In relation to normal bar charts, the candlestick charts have the same data but their advantage is the fact that they highlight the relationship between opening and closing prices. At candlestick charts, the narrow stick is representative of the range of prices traded during the period (high - low) and the broad mid-section shows the opening and closing prices for the period. The candlestick mid-section is often colored differently depending if the close is higher than the open or if the close is lower than the open. Other significant candlestick symbols include doji candlesticks, which happen when the open and closing price are equal. Another major candlestick indicator is the dragonfly, which occurs when the open and close are near the top of the candlestick. This candlestick indicator is often interpreted as an indication of an reversal after a down-trend. Other similar technical analysis indicators from the candlestick charts include the hammer, which signals reversal after a down-trend. In it, the shadow of the candlestick is at least twice the height of the body. A counter part of the hammer is called a gravestone, which happens when the open and close are near the bottom of the trading range and it signals a reversal after an up-trend. Other popular candlestick chart indicators are:
If you're interested in learning the basics of trading with candlestick charts, some of the good books on the subject include: Japanese Candlestick Charting Techniques by Steve Nison Candlestick Charting Explained by Gregory Morris The Candlestick Course by Steve Nison Profitable Candlestick Trading: Pinpointing Market Opportunities to Maximize Profits by Stephen W. Bigalow High Profit Candlestick Patterns by Stephen Bigalow Encyclopedia of Candlestick Charts (Wiley Trading) by Thomas N. Bulkowski |