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What is Candlestick Chart?


Candlestick chart: It is a technical tool use to analyse the changes of the stock prices in given period of time. It is based on past data to forecast the future changes in the stock prices. It is also known as Japanese Candlestick chart.
The chart shows opening price, closing price, high and low prices of stock for specified period.
In candlestick chart the wider part is known as real body which can be white/green and black/red according to the market conditions. The top and bottom line of a candle is known as wick/shadow /tail which represents shows high and low prices. The upper end of the candle shows opening price and lower end of the candle shows closing price in bearish market.


Bullish market:
When the closing price is higher than the opening prices in a given period is known as bullish market. And the real body is in green or white colour. The closing price shows in upper side of wick and opening prices shows in lower wick of candlestick.

 Bearish market: The opening price is more than closing price and an opening price located above the candlestick and closing prices located below the candlestick. The real body of the candlestick is filled with red or black colour.
Types of patterns:

      There are different types of patterns shown in candlestick chart. The stock market work as supply and demand means rise in demand of stock can increase the price of a stock because buyer bid higher price for that stock and more supply can reduces the prices of stock. Some of the patterns of candlestick chart are explain below:

·         Hammer: It shows bullish market. The bottom tail of the candle is 2 times greater than body of the candle. Supplier wants to take control of the market so the prices of stock goes down but buyers forces and regain the market and the prices increases of the stock.

Shooting star: It shows at the top of the uptrend as a signal that there is a change in the pattern. The shape of star is  similar to inverted hammer and it shows in  bearish market.

·        Doji: It is form when there is a slight difference between opening and closing prices. It neither shows bullish market nor bearish market. The size of candle is small. It is a indecisive case. 
           Morning star: It is a sign of bullish trend. This pattern is form with the help of 3 day candlesticks. It shows change in the price of stock in upward. The day 1 candle shows red bearish trend and 2nd day candle shows low gap it can be bearish or bullish trend because stock prices closes high near to opening price like Doji. The 3rd candle shows bearish trend in green colour.
·         Evening star: This pattern is similar to morning star only difference is that it shows price changes in downward direction with the help of 3 candles in which one candles shows bullish trend and 2nd candle shows closing price is slightly lower than opening price. The 3rd candle shows strong bearish trend.
·         Marubuzo: The candlestick doesn’t show wick in top and bottom of a candle. It can be white or black in colour. The opening and closing prices are same as high and low in bullish and bearish market.





Comments

  1. Phani KumarJuly 11, 2020 3:09 pm

    Hey, thanks for the information. your posts are informative and useful. I am regularly following your posts.
    Idea
    Airtel
    Vodafone

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