If the wick is even taller than a long body, it shows that there was a high level of volatility within the period. A long body on a green candlestick, for example, tells you that significant bullish price action occurred. Using those three elements, you can learn a lot about a market’s movement within a particular period. On both red and green sticks, the top of the wick (sometimes called the shadow) is the highest point that the market has hit within the period – and the bottom is the lowest.On a green candle, the top of the body is the close and the bottom is the open.However, occasionally white (up) and black (down) is used instead On most charts today, green candlesticks indicate upward movement and red ones a move down.Its colour tells you the direction of movement within the period, its body displays the market's opening and closing levels and its wick shows the high/low range.
To read Japanese candlestick patterns, you'll need to familiarise yourself with three elements on each candle: its colour, its body and its wick. They do this by looking for recognisable shapes that often lead to continuations or reversals.Ĭandlesticks can be used to examine price action over any timeframe, from one second up to an entire year.įind out more about the different types of charts in IG Academy How to read Japanese candlestick patterns It's worth trying out both and seeing which works best for you.Īs well as using them to track previous price movements, technical traders look for Japanese candlestick patterns for clues on where a market’s headed next.
High Low Open Close (HLOC) charts display a similar level of detail to candlesticks – but traders tend to favour the latter, finding them easier to analyse quickly than HLOC.
They offer much more information visually than traditional line charts, showing a market's highest point, lowest point, opening price and closing price at a glance. Today, Japanese candlestick charts are the most popular way to quickly analyse price action, particularly with technical traders.
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