UNDERSTANDING JAPANESE CANDLESTICK CHART PATTERNS

Futures trading bar charts, Japanese candlesticks show price movements

Like bar charts, candlesticks show price movements over time but differ from these in the representation of the bar. Candlesticks have colored 'bodies' which represent the range between the opening and closing price for that particular time period.

The color represents either the downward or upward movement of price. White bars are 'up' days, meaning the closing price is higher than the opening price. Black bars are 'down' days, meaning the closing price is lower than the opening price.

The little sticks above or below the bodies represent the highest and lowest prices achieved in that time period. Candlestick patterns can consist of one or several individual candles. Like bar charts patterns, candlestick patterns can be used to forecast the market. Because of their colored bodies, candlesticks visually represent greater detail in their chart patterns than bar charts.