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In financial
Candlesticks are graphical representations of price movements for a given period of time. They are commonly formed by the opening, high, low, and closing prices of a financial instrument.
If the opening price is above the closing price then a filled (normally red or black) candlestick is drawn.
If the closing price is above the opening price, then normally a green or hollow candlestick (white with black outline) is shown.
The filled or hollow portion of the candle is known as the body or ''real body'', and can be long, normal, or short depending on its proportion to the lines above or below it.
The lines above and below, known as ''shadows'', ''tails'', or ''wicks'', represent the high and low price ranges within a specified time period. However, not all candlesticks have shadows.
''Bulkowski's Stock Market Patterns'' On line, includes research, statistical validation, and follow-on results.
{{DEFAULTSORT:Candlestick Pattern Candlestick patterns Technical analysis
technical analysis
In finance, technical analysis is an analysis methodology for analysing and forecasting the direction of prices through the study of past market data, primarily price and volume. Behavioral economics and quantitative analysis use many of the sam ...
, a candlestick pattern is a movement in prices shown graphically on a candlestick chart
A candlestick chart (also called Japanese candlestick chart or K-line) is a style of financial chart used to describe price movements of a security, derivative, or currency.
It is similar to a bar chart in that each candlestick represents all f ...
that some believe can predict a particular market movement. The recognition of the pattern is subjective and programs that are used for charting have to rely on predefined rules to match the pattern. There are 42 recognized patterns that can be split into simple and complex patterns.
History
Some of the earliest technical trading analysis was used to track prices of rice in the 18th century. Much of the credit for candlestick charting goes to Munehisa Homma (1724–1803), a rice merchant from Sakata, Japan who traded in the Ojima Rice market inOsaka
is a designated city in the Kansai region of Honshu in Japan. It is the capital of and most populous city in Osaka Prefecture, and the third most populous city in Japan, following Special wards of Tokyo and Yokohama. With a population of ...
during the Tokugawa Shogunate
The Tokugawa shogunate (, Japanese 徳川幕府 ''Tokugawa bakufu''), also known as the , was the military government of Japan during the Edo period from 1603 to 1868. Nussbaum, Louis-Frédéric. (2005)"''Tokugawa-jidai''"in ''Japan Encyclopedia ...
. According to Steve Nison, however, candlestick charting came later, probably beginning after 1850.
Formation of candlestick
Candlesticks are graphical representations of price movements for a given period of time. They are commonly formed by the opening, high, low, and closing prices of a financial instrument.
If the opening price is above the closing price then a filled (normally red or black) candlestick is drawn.
If the closing price is above the opening price, then normally a green or hollow candlestick (white with black outline) is shown.
The filled or hollow portion of the candle is known as the body or ''real body'', and can be long, normal, or short depending on its proportion to the lines above or below it.
The lines above and below, known as ''shadows'', ''tails'', or ''wicks'', represent the high and low price ranges within a specified time period. However, not all candlesticks have shadows.
Simple patterns
Complex patterns
See also
* The Island ReversalFurther reading
*References
External links
''Bulkowski's Stock Market Patterns'' On line, includes research, statistical validation, and follow-on results.
{{DEFAULTSORT:Candlestick Pattern Candlestick patterns Technical analysis