DEFINITION of 'Short Line Candle'

Short Line Candles – also known as short candles – are candles on a candlestick chart that have a short real body. This occurs when there is only a small difference between the opening price and the closing price over a given period. The length of the upper and lower shadows – representing the high and low for the period – do not make a difference in defining a short line candle. In other words, a short line candle may have a wide high and low range for the period, but always have a narrow open and close range for the period.

BREAKING DOWN 'Short Line Candle'

Candlestick charts are often used to assess market sentiment at a glance. Short line candles generally signal that the market is consolidating with little price movement. But, they may have different meanings depending on where they occur in a chart.

For example, a short line candle may take the form of a hammer where there is a lower tail with no upper tail. This is a bullish reversal pattern and could indicate the end of a downtrend. On the other hand, a series of short line candles could simply suggest indecision and provide traders with few hints as to where future prices are headed.

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