Candlestick charts are an effective way of visualizing price movements. There are two basic candlesticks:
- Bullish Candle: When the close is higher than the open (usually green or white)
- Bearish Candle: When the close is lower than the open (usually red or black)
There are three main parts to a candlestick:
Upper Shadow: The vertical line between the high of the day and the close (bullish candle) or open (bearish candle)
Real Body: The difference between the open and close; colored portion of the candlestick
Lower Shadow: The vertical line between the low of the day and the open (bullish candle) or close (bearish candle)
Candlestick patterns can be made up of one candle or multiple candlesticks, and can form reversal or continuation patterns. Commodity.com has many detailed explanations of these candlestick patterns; the links are given below:
- Bullish Engulfing Pattern
- Bearish Engulfing Pattern
- Dark Cloud Cover
- Dragonfly Doji
- Evening Star
- Gravestone Doji
- Hanging Man
- Inverted Hammer
- Morning Star
- Piercing Pattern
- Shooting Star
- Tweezer Tops & Bottoms
If you prefer a video explanation of candlesticks, then please see Candlestick Charts Explained.
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