Candlesticks Explained: Types, Pros & Cons

Candlestick charts are one of the most widely used tools in technical analysis. Originating from Japanese rice traders centuries ago, these charts offer a visual representation of price movements, helping traders identify potential market trends and reversals. Each candlestick conveys crucial information about price action within a specific time frame, making them invaluable for both beginner and experienced traders. What is a Candlestick? A single candlestick shows four key price levels for a given time period: Open : The price when the period begins Close : The price when the period ends High : The highest price during the period Low : The lowest price during the period The candlestick body (also called the real body) represents the range between the open and close. If the close is higher than the open, the candle is typically colored green or white (bullish). If the close is lower than the open, it's usually red or black (bearish). Thin lines above and below the bo...