Ok so in previous
blog we talked about different types of charts we use in Technical analysis, if
you have visited this website for the first time then you can go to "Different types of charts used for Technical analysis" for it.
So Candle chart or
Japanese candle chart as the name indicates was first developed by Munehisa
Homma, a Japanese rice trader of Financial instrument.
The daily candlestick line contains the market's open,
high, low and close of a specific day. Candlesticks are usually composed of the body (black /
white or green / red), and an upper and a lower shadow. Shadows are also known
as wicks of the candle. The area between the open and the close is called the real body,
price excursions above and below the real body are shadows.
The wick illustrates the highest and lowest traded prices of a security during
the time interval represented. The body illustrates the opening and closing
trades. This real body represents the range between the open and close of that day's trading.
When the real body is filled in or black (or in red color), it means the close was lower than the open. If the real
body is empty (or in green color), it means the opposite: the close was higher than the
open.
Candle when forms looks like:
Further Candles can be of different period hourly, daily,
monthly etc.
Different candles forms different shapes which helps a
trader to identify the future movements and make profit out of it.
An example of four hours candle stick chart is :
Hope you all like the article; if you have any other doubt
related to charts please ask us in comment box.
