Candlestick Bullish Candlestick BearishOne Day Candlestick
Using these four price, a candle stick is drawn in such a way that the range of opening price and closing price is plotted as a candle (rectangular structure). The higher the difference between Opening and closing price, the higher is the length of the candle. The width of the candle is more than width of the standard line and is generally kept in such a way it is quite easily visible.
Single candle:
As we have learn 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.
Color convention in Candlestick:
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. 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.
Candlestick Bullish Candlestick BearishOne Day Candlestick