Traditional charts compared with Bar charts
The majority of traders consider Candlesticks an easier Charting System to interpret and more visually appealing charts than other types of Charting Systems. Each type of Candlestick provides an easy to understand picture of the price movement during the period in question.
– Hollow or White Candlesticks:
In those Candlesticks, the closing price is higher than the opening price, which indicates buying pressure.
– Filled or Black Candlesticks:
In those Candlesticks, the closing price is lower than the opening price, which indicates selling pressure.
Long versus Short Bodies
The longer the body the more intense the buying or selling pressure was. Conversely, short candlesticks represent less price action, movement or volatility. The longer white Candlesticks show strong buying pressure, similarly the long black Candlesticks show strong selling pressure.
The smaller white and black candlesticks show less buying and selling pressure respectively or in other words, more price consolidation.
Marubozu Candlesticks are those white or black Candlesticks, which do not have any shadows and only contain a body.
– White candlesticks:
The opening price is the lowest price and the closing price is the highest price during that period.
– Black candlesticks:
The opening price is the highest price and the closing price is the lowest price during that period.
Long versus Short shadows
The upper and lower shadows of candlesticks can provide valuable information about the trading session. Upper shadows represent the point where the highest price has been reached during that period, and lower shadows represent the point where the lowest price during the same period or trading session. Candlesticks with short shadows indicate that most prices offered during that session were limited to the open and close prices, whereas long shadows indicates that prices offered exceeded to opening and close price of that period or trading session.