A type of financial chart used to describe price movements of a security, showing open, high, low, and close prices.
A candlestick chart is a type of financial chart used to track price movements of securities. Originating in Japan for rice trading, it displays the high, low, open, and close prices for a specific time period in a highly visual manner.
Each 'candle' consists of a solid body and thin lines called shadows or wicks. A green (bullish) candle means the closing price was higher than the opening price. A red (bearish) candle means the close was lower than the open. The wicks represent the highest and lowest prices reached during that time period.
Candlestick charts are preferred by almost all active traders because they display market psychology in real-time. Single candles (like Hammer, Shooting Star) and multi-candle patterns (like Bullish Engulfing, Morning Star) signal buyers' and sellers' momentum and can predict trend reversals or continuations.
You are monitoring Nifty on a 15-minute chart during a downtrend. Suddenly, the price hits a support line and forms a 'Hammer' candlestick (a small body at the top with a very long lower wick, indicating sellers tried to push the price down but buyers pushed it back up before the close). Recognizing this bullish reversal pattern, you prepare to place a buy order.
Line charts connect only the closing prices, hiding the high, low, and open volatility. Candlestick charts display all four price data points, giving a much deeper insight into intraday price battles.
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Download Free Android AppA trading discipline used to evaluate investments and identify trading opportunities by analyzing statistical trends from trading activity.
A method of evaluating a security to measure its intrinsic value by examining related economic, financial, and qualitative factors.
Price levels on a chart where a stock price tends to find buying support (floor) or selling pressure (ceiling).