What are candlestick charts?

Traders use candlestick charts to know the possible price movement as per their past patterns in the share market. It is an important aspect of technical analysis. Candlestick charts are popular due to the wide range of trading information they provide, in accordance with the easy design to read and interpret.

A lot of algorithms are made on the same price information as portrayed in candlestick charts. On the chart, each candlestick represents the open, high, low, and close price with the time period chosen by the trader. Candlestick also represents the current price in the process of formation, irrespective of whether the price moves up or down over the period of time or the range, the asset covers during that time. 

There is a wide part in the candlestick called “body”. This body shows the range of price between the open and close of that day’s trading. A body filled with red symbolizes that the close was lower than the open in the share market. A green body indicates that the close was higher than the open. 

Up and down movements in the price make up candlesticks. The candlestick patterns are divided into bullish and bearish in technical analysis. Bullish patterns show that the price is likely to rise, whereas bearish patterns show that the price is likely to fall. 

Candlestick charts represent tendencies in price movements with no guarantee. Therefore, no pattern works all the time.

To know more about candlestick charts and technical analysis, click here.