It’s time to understand how Japanese candlesticks work. If you are a beginner, this information is for you, so, keep reading this article!
Price action is important to understand Japanese candlesticks.
Price action is important information for any trader,. It tells you exactly what the price is doing in any period given in any of the indicators you can see. On the screen you are trading, you can take the information from the raw data of the price action. It is made up of many candles which tend to be bullish or bearish.
Difference between green and red Japanese candles
A green candlestick represents a bullish candlestick. It simply means that the price has increased over time. On the other hand, the red candlestick is bearish. This means that the price has gone down for some time.
What we want to say is that each candle formed represents the value of a certain time of action. Within the candles themselves we can obtain more information. The fattest rectangular part of any candlestick is known as the true body. Also, what the real body shows us related to the open price.
Then, we have the top of the body of the candlestick. It shows the open price, and the bottom of the body is the closing price. As a bearish candlestick shows price decline, which you’ll see on charts more often than just candlesticks.
How do Japanese candlesticks look?
The candlesticks are vertical, like lines extending from both ends. Remember that the green candlestick shows a price increase. And the red candlestick a price decrease over a period of time.
The actual body of the candlestick still contains information about when it was opened and the closing price of each one. The vertical lines coming out of the candlesticks are called shadows or tails or wicks. The highest or lowest wicks of the period mean that the price would have touched the top or bottom of the wicks. This, while the candle was forming before closing. This is invaluable information for a trader!
What are Doji candles?
Candlesticks that have little or no body are known as Doji candlesticks. What a Doji candlestick says is that the price opened and closed at the same time or very close to the same price.
Conclusion
We hope this information on candlesticks and charts can be helpful for you to continue getting an education like this. We invite you to visit Cristian AP’s YouTube channel where you can find, like this, much more helpful information for you.