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Candlestick chart - Wikipedia, the free encyclopedia Page 1 of 3 Candlestick chart From Wikipedia, the free encyclopedia A candlestick chart is a style of bar-chart used primarily to describe price movements of a security, derivative, or currency over time. It is a combination of a line-chart and a bar-chart, in that each bar represents the range of price movement over a given time interval. It is most often used in technical analysis of equity and currency price patterns. They appear superfi
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  Candlestick chart From Wikipedia, the free encyclopedia A candlestick chart is a style of bar-chart usedprimarily to describe price movements of asecurity, derivative, or currency over time.It is a combination of a line-chart and a bar-chart,in that each bar represents the range of pricemovement over a given time interval. It is mostoften used in technical analysis of equity andcurrency price patterns. They appearsuperficially similar to error bars, but areunrelated. History Candlestick charts are thought to have been developed in the 16th century by Japanese rice trader of financial instruments. [ citation needed  ] . They were introduced to the Western world by Steve Nison in hisbook, Japanese Candlestick Charting Techniques . [1]   Candlestick chart topics Candlesticks are usually composed of the body (black orwhite), and an upper and a lower shadow (wick): the areabetween the open and the close is called the real body , price excursions above and below the real bodyare called shadows . The wick illustrates the highest and lowest traded prices of a security during thetime interval represented. The body illustrates the opening and closing trades. If the security closedhigher than it opened, the body is white or unfilled, with the opening price at the bottom of the body andthe closing price at the top. If the security closed lower than it opened, the body is black, with theopening price at the top and the closing price at the bottom. A candlestick need not have either a body ora wick. Candlestick chart of EURUSD Contents  1 History  2 Candlestick chart topics  2.1 Candlestick simple patterns  2.2 Complex Patterns  2.3 Use of candlestick charts  3 Variations  3.1 Heikin-Ashi candlesticks  3.2 Hollow red candlesticks  4 References  5 See also  6 External linksPage 1 of 3Candlestick chart - Wikipedia, the free encyclopedia7/16/2011http://en.wikipedia.org/wiki/Candlestick_chart  To better highlight price movements, modern candlestick charts (especially those displayed digitally) often replace theblack or white of the candlestick body with colors such as red(for a lower closing) and blue or green (for a higher closing). Candlestick simple patterns Further information: Candlestick pattern#Simple patterns There are multiple forms of candlestick chart patterns. Complex Patterns Further information: Candlestick pattern#Complex patterns In addition to the rather simple patterns depicted in the section above, there are more complex anddifficult patterns which have been identified since the charting method's inception. Complex patternscan be colored or highlighted for better visualization.Candlestick charts also convey more information than other forms of charts, such as bar charts. Just aswith bar charts, they display the absolute values of the open, high, low, and closing price for a givenperiod. But they also show how those prices are relative to the prior periods' prices, so one can tell bylooking at one bar if the price action is higher or lower than the prior one. They are also visually easierto look at [ citation needed  ] , and can be coloured for even better definition. Rather than using the open-high-low-close for a given time period (for example, 5 minute, 1 hour, 1 day, 1 month), candlesticks can alsobe constructed using the open-high-low-close of a specified volume range (for example, 1,000; 100,000;1 million shares per candlestick). Use of candlestick charts Candlestick charts are a visual aid for decision making in stock, forex, commodity, and options trading.For example, when the bar is white and high relative to other time periods, it means buyers are verybullish. The opposite is true for a black bar. Variations Heikin-Ashi candlesticks Heikin-Ashi (Japanese for 'average bar') candlesticks are a weighted version of candlesticks calculatedwith the following formula:  Open = (open of previous bar+close of previous bar)/2  Close = (open+high+low+close)/4  High = maximum of high, open, or close (whichever is highest)  Low = minimum of low, open, or close (whichever is lowest)Heikin-Ashi candlesticks must be used with caution with regards to the price as the body doesn't The basic candlestick  Page 2 of 3Candlestick chart - Wikipedia, the free encyclopedia7/16/2011http://en.wikipedia.org/wiki/Candlestick_chart  necessarily sync up with the actual open/close. Unlike with regular candlesticks, a long wick showsmore strength, whereas the same period on a standard chart might show a long body with little or nowick. Depending on the software or user preference, Heikin-Ashi may be used to chart the price (insteadof line, bar, or candlestick), as an indicator overlaid on a regular chart, or as an indicator plotted on aseparate window. Hollow red candlesticks For example, on May 23 2000, a hollow red candle appears on GE because GE gapped down on theopen, rose during the day, but didn't close above the closing price for May 22nd.Used by scottrade and others. References 1. ^ {{cite web|url=http://candlecharts.com/why-nison-candlesticks.html See also  Spinning top (candlestick pattern)  Kagi chart  Pivot point calculations  Chart pattern  Open-high-low-close chart  Hikkake Pattern External links  Tutorial of 16 Candlestick patterns with charts and explanations(http://www.onlinetradingconcepts.com/TechnicalAnalysis/Candlesticks/CandlestickBasics.html)Retrieved from http://en.wikipedia.org/wiki/Candlestick_chart Categories: Financial charts  This page was last modified on 8 July 2011 at 19:17.  Text is available under the Creative Commons Attribution-ShareAlike License; additional termsmay apply. See Terms of use for details.Wikipedia® is a registered trademark of the Wikimedia Foundation, Inc., a non-profit organization.Page 3 of 3Candlestick chart - Wikipedia, the free encyclopedia7/16/2011http://en.wikipedia.org/wiki/Candlestick_chart
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