A Look Inside The Candlestick Chart
📍What Is a Candlestick?The formation of the candle is essentially a plot of price over a period of time. For this reason, a one minute candle is a plot of the price fluctuation during a single minute of the trading day. The actual candle is just a visual record of that price action and all of the trading executions that occurred in one minute.
📍Who Discovered the Idea of Candlestick Patterns? It is commonly believed that candlestick charts were invented by a Japanese rice futures trader from the 18th century. His name was Munehisa Honma. Honma traded on the Dojima Rice Exchange of Osaka, considered to be the first formal futures exchange in history. As the father of candlestick charting, Honma recognized the impact of human emotion on markets. Thus, he devised a system of charting that gave him an edge in understanding the ebb and flow of these emotions and their effect on rice future prices.
📉Bearish Candle🔹 Open Price: A bearish candlestick forms when the opening price of a currency pair is higher than the closing price of the previous candlestick.
🔹 High and Low Price: During the candlestick's time frame, the price moves higher than the opening price and then declines to form a lower low than the previous candlestick.
🔹 Body: The body of the bearish candlestick is colored red and represents the difference between the opening and closing price. The longer the body of the candlestick, the stronger the bearish sentiment.
🔹 Upper Shadow: The upper shadow of the candlestick represents the highest price achieved during the candlestick's time frame. The longer the upper shadow, the greater the bearish pressure.
🔹 Lower Shadow: The lower shadow of the candlestick represents the lowest price achieved during the candlestick's time frame. The shorter the lower shadow, the stronger the bearish sentiment.
📈Bullish Candle
🔹 Open Price: A bullish candlestick forms when the opening price of a currency pair is lower than the closing price of the previous candlestick.
🔹 High and Low Price: During the candlestick's time frame, the price moves lower than the opening price and then rises to form a higher high than the previous candlestick.
🔹 Body: The body of the bullish candlestick is colored green and represents the difference between the opening and closing price. The longer the body of the candlestick, the stronger the bullish sentiment.
🔹 Upper Shadow: The upper shadow of the candlestick represents the highest price achieved during the candlestick's time frame. The shorter the upper shadow, the greater the bullish pressure.
🔹 Lower Shadow: The lower shadow of the candlestick represents the lowest price achieved during the candlestick's time frame. The longer the lower shadow, the greater the bullish sentiment.
