Posted by forex at 12:51 AM
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1. Read a candlestick chart by looking at the bars and lines. The bars, called bodies, show the opening and closing prices for your selected time period. When the stock's closing price was higher than its opening price, the top of the body shows the closing price, the bottom shows the opening price, and the inside of the body will be white. When the opening price was higher than the closing, the top of the body will be the opening price, the bottom the closing price, and the inside of the body will be black. The lines (also called wicks, tails or shadows) extending above and below the body show the highest and lowest prices for the time period.
2. Interpret the bodies (bars) on a chart by looking at their length and color. Long white bars show there has been considerably more buying than selling, and long black bars show the reverse. Short bars show consolidation.
3. Interpret the wicks (lines) on the chart by looking at their length. Short wicks show that most of the trades were within the range of the opening and closing prices. Long wicks show that trading extended well outside of that range.
4. Look for patterns in the chart that extend over time. For example, if a stock price is in a long downward trend, a long white candle body, indicating aggressive buying, may be a signal that the trend is starting to reverse.