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Bullish Candlestick Bearish Candlestick One Day Candlestick Tutorial on CandlestickHistory of CandlestickIt is believed that usage of candlestick originated from Japan in 1700 by rice traders. Over years, its popularity grew significantly as more and more analyst found value in using them. Currently, there are more than 100 patterns recognised based on candlestick formation. In this era you will hardly find one charting tool that does not have candlestick charting in it. That itself speaks on the value that this way of representation provides. What is Candlestick ?
Candlestick is one of the most popular way of representing price movement of a stock in graphical manner. To give context of where candlestick fits, it may be useful to mention other common type of charts. They are line char, bar chart etc.
Composition of candlestickA candle stick composes of four different points of price movement in a day. They are
Parts of candlestick
Types of candlestick
Color convention.Initially, bullish candle stick were kept blank (white color with black border) and bearish candlestick were filled with black color. This, however, is not universal convention. Different tools uses different color scheme. Color convention in Topstockresearch
We at our site always believe in keeping things simple and obvious convention so that our visitor can concentrate on the actual analysis rather than trying to understand the conventions. Continuing with the same philosophy , we color bullish candlestick in green ( denoting bullish sentiment ) so that user can look to invest provided other parameter are supportive. And bearish candlestick as red to give a warning to the investor of looming negativity in the stock. Stock Screener of Indian Stocks Forming
Understanding candlestick to gauge market sentiment.Single candleAs we have learnt how a candle stick is formed. Now lets try to understand on what we can make out of it. In most simplest form, a bullish candlestick denotes that there was some optimism on the stock price upward move at the end of the candlestick period. And in the same way a bearish denotes general pessimism on the stock. On carefully observing them, it provides more than open , close , high & low price. It can tell how market is perceiving the stock on a given day. For example if the close price is much higher than opening price (long candle) then it denotes general bullish sentiments on the stock. In other word when the stock opened the buy sentiment was much lesser than towards the end of the day. Or buying pressure was more than selling pressure. This indication is more when the upper wick is small. Similarly, when closing price is much lesser than opening price then it signal weakness in the stock A small body with small wick signals less volatility in the stock. Also known as Doji. A small body with very long wicks means lack of direction on the price movement and coupled with huge volatility. Multiple candle stick pattern.As we now understand what a single candlestick can provide. Similarly, when more than one candle stick in combination can provide very meaningful interpretations on price movements , trend continuation, trend reversals etc. Advantages of candlestick
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