One of our new series is to help understand financial charts.
In this post, one of our exclusive contributors Justin Gingery explains how to understand the candlestick chart.
One of the most prominent and basic charts used today to monitor a specific stocks activity within a day. Understanding the “Candlestick Chart” may appear to be complex but in reality it is quite simple and most importantly very effective. In order to adequately analyze a candlestick chart, you must have a data set that contains open, high, low and close values for the timeframe you wanted to analyze.
The hollow or filled portion of the candlestick is called “The Real Body”. The long thin lines above and below the body represent the high/low range and are called “shadows/wicks”. The high is marked by the top of the upper shadow and the low by the bottom of the lower shadow. If the stock closes higher than its opening price, a hollow “candlestick” is drawn with the bottom of the body expressing the opening price and the top of the body expressing the closing price. If the stock closes lower than its opening price, a filled candlestick is drawn with the top of the body representing the opening price and the bottom of the body representing the closing price.
