Candlestick

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What is a 'Candlestick'

A candlestick is a chart that displays the high, low, opening and closing prices for a security for a single day. The wide part of the candlestick is called the "real body" and tells investors whether the closing price was higher or lower than the opening price (black/red if the stock closed lower, white/green if the stock closed higher). The candlestick's shadows show the day's high and lows and how they compare to the open and close. A candlestick's shape varies based on the relationship between the day's high, low, opening and closing prices.

Candlestick

BREAKING DOWN 'Candlestick'

Candlesticks reflect the impact of investors' emotions on security prices and are used by technical analysts to determine when to enter and exit trades. Candlestick charting is based on a technique developed in Japan in the 1700s for tracking the price of rice. There are many short-term trading strategies based upon candlestick patterns, such as the engulfing pattern, harami, harami cross and evening star.

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RELATED FAQS
  1. How do I implement a forex strategy when spotting a Star Pattern?

    Learn a simple forex trading strategy designed to take advantage of market reversal indications given by three star candlestick ... Read Answer >>
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    A candlestick with no shadow is regarded as a strong signal of conviction by either buyers or sellers depending on whether ... Read Answer >>
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