Japanese Candlesticks
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A Japanese candlestick is a compact visual representation of OHLC price data for a defined period. It shows the relationship between the open, high, low, and close.
What a Candlestick Contains
The body represents the distance between open and close. The upper and lower wicks show the high and low relative to the body. Depending on the close relative to the open, the candle can be bullish or bearish.
Candlesticks help us see the relationship between opening and closing prices and the extremes reached during the period. They do not, by themselves, establish a trading signal.
Key Terms
Japanese candlestick, body, wick, open, high, low, close, bullish, bearish.
Knowledge Check
- What data does a candlestick represent?
- What does the body represent?
- What do the wicks represent?