Japanese Candlestick
A charting method showing open, high, low, and close prices that reveals market sentiment and potential reversals.
Definition
Japanese candlesticks are a charting technique that displays four price points (open, high, low, close) in a visual format. The "body" shows the open-close range, while "wicks" show the high-low range. Patterns formed by candlesticks can signal potential price movements.
How It Works
- Green/white body: Close > Open (bullish)
- Red/black body: Close < Open (bearish)
- Upper wick: High price reached
- Lower wick: Low price reached
Types of Japanese Candlestick
Doji
Open and close nearly equal - indecision
Hammer
Small body, long lower wick - potential reversal
Engulfing
Large candle engulfs previous - strong signal
Trading Tips
1
Patterns are more reliable on higher timeframes
2
Confirm with other indicators
3
Consider the trend context
Related Terms
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