HOW TO READ CANDLESTICK

The data point relating to price over a period can be represented in various ways and one of the most popular ways is by using line graph. Line graph can show data with only one dimension either it can be closing, opening, high or low. Candle stick pattern overcomes this limitation and in one candle all four elements of prices viz Open Close High Low can be represented. A candle can be Bullish Candle (Green candle) or Bearish Candle (Red candle).

Every candle has three elements viz A body, Upper wick, and Lower wick. Top End point of wick represents High and Bottom end portion of wick represents Low whereas Starting and End point of body represents Open and Close. For Bullish Candle, Open is bottom portion of body and close is top portion and vice versa for Bearish Candle. Candle stick can represent any time frame (hourly, daily, weekly, monthly, or yearly candle). Individual Candlestick chart can be of various shapes thereby showing how bullish or bearish the situation is. Collectively multiple Candle stick can form pattern which can also be bullish or bearish depending upon the time of pattern it is.

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