Technical

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

Patterns are more reliable on higher timeframes

Confirm with other indicators

Consider the trend context

Related Terms

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