Candlestick chart is a important asset for a trader because they provide simple visual information regarding price movements over a specific period of time.
What Is Candlestick Chart?
In simple terms, candlesticks In Graphical way convey information about price movement. Like,
- What is the opening price?
- What is the closing price ?
- What was the highest price a stock reached during a specific trading session (day or week)?
- What was the Lowest price a stock reached during a specific trading session (day or week)?
A bullish candle indicates that the price closed higher than it opened. In Some chart white or green both color can be used for depicting the bullish candle.
Similarly Bearish candle represents that price closer lower than it opened. In some chart black or red both color can be used for depicting the bearish candle.
Why candlesticks chart works ?
At the end of the day, what is the goal of a trader? To make a profit. How do you achieve that? By accurately predicting the market sentiment, whether it is a bull market or a bear market. And Candlestick chart exactly achieves this purpose by giving accurate pictorial or visual picture or narrative to a trader. For example take a look at this candlestick chart pattern. This is gravestone Doji,
By the color of the candlestick we can say that it is bearish candle. Hence price closed lower than it opened. This gives us a couple of information,
- Indicates bearish sentiment.
- Also Bulls Tried to push price higher as indicated by longer wick but bears has the last laugh because they were able to bring back the price below the opening price.
This Is how candlestick can provide a lot of information.
In our next Blog we will discuss about lot of candlestick chart patterns.
