1. It will teach you how to think in probabilities.
\n2. It greatly improves your odds for a winning trade.
\n3. You will learn how to come up with your own analysis.
\n4. You will know who’s winning: buyers (bulls) vs sellers (bears).
\n5. This will be the \u201cblueprint\u201d for most of the trading setups you\u2019ll trade.<\/p>\n
Open, high, low, close, body \u2013 the parts of a candlestick<\/strong><\/p>\n When looking at a candlestick, it is important that you know the open, close, high, low, as well as what the body and even the range is. For the following examples, we will use green (when the candle is trading or closes above its open or commonly known as Bullish Candle) and red (when the candle closes or is trading below its open or the Bearish Candle) colored candlesticks.<\/p>\n This represents the first price bought of the timeframe of your candle. If the succeeding transactions are higher than the open, then the candlestick will become color green, but if the next trades after the open are below the open, then the candlestick will turn red.<\/p>\n High Price<\/strong><\/p>\n This shows the highest price traded during the period\/timeframe of the candle. This is represented by the upper wick\/shadow. If ever there\u2019s no wick\/shadow, then the open or close price is the highest price.<\/p>\n Low Price<\/strong><\/p>\n This displays the lowest price traded during the period\/timeframe of the candle. Same as what you see in the high price, there should be a wick\/shadow but in this case it\u2019s in the lower part of the candle. No wick\/shadow means that the close price is the lowest price.<\/p>\n Close<\/strong><\/p>\n This is the last price sold or the last transaction of the timeframe of the candle. This will ultimately determine the color of the candle. If the last traded price closes above the open, then the candlestick should be color green. Meanwhile, if the last price closes below the open, then the candlestick should be of red color. It is the most important part of the candle as this determines whether the bulls (buyers) or bears (sellers) won.<\/p>\n Wicks\/Shadows<\/strong><\/p>\n These are simply the lines that represents the high and the low price. The upper wicks\/shadows represent the high price whilst the lower wicks\/shadows depict the low price. Wicks can be long or short depending on volatility.<\/p>\n Range<\/strong><\/p>\n This is the difference between the high and the low of the candlestick. The bigger the range, the more volatile the candlestick traded during its timeframe as the buying pressure battles with selling pressure. The smaller the range, the less volatile it was (could also represent as consolidation). The formula to compute this is: Range = High \u2013 Low.<\/p>\n Body<\/strong><\/p>\n This is the color-filled section of the candlestick. The color of the body gives us the clue as to where the course or the bias of the candlestick is headed (either upwards or downwards). If a candlestick closed well above its high without lower and upper wicks, you can expect that buying pressure will carry over somehow on the next candle.<\/p>\n In InvestaChart<\/a>, the open, high, low, and close is conspicuous. It can easily be seen on the right side of the stock\u2019s name just by pointing your mouse over a candlestick.<\/p>\n Here are a few examples of basic candlesticks. The following interpretations are also indicated:<\/strong> Bullish Engulfing<\/strong><\/p>\n The candlestick pattern within the blue box in the middle of the chart is called a \u201cBullish Engulfing\u201d. A bullish engulfing is a two-candle bullish reversal pattern. It happens when a candle\u2019s body fully engulfs the body of the previous candle after a declining trend. It tells you that there\u2019s a high chance that selling is waning down and that the buyers are now present. The next candles after the pattern shows that the buyers were indeed present.<\/p>\n Evening Star<\/strong><\/p>\n What you see here is the \u201cEvening Star\u201d bearish reversal pattern. It\u2019s a three-candle stick pattern that involves a prior uptrend. The first candle should be strong and bullish, the middle shows weakness in the trend, while the third and last candle gaps down, making strong selling pressure felt.<\/p>\n![\"\"](\"https:\/\/dailymedia.investagrams.com\/investadaily\/2019\/02\/Candlestick-Guide-1.jpg\")
<\/a>Open<\/strong><\/p>\n<\/a><\/p>\n<\/a>Some examples of candlestick patterns:<\/strong><\/p>\n<\/a><\/p>\n