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1. Identify candlestick shape. A candlestick can take various shapes depending on how a stock has moved. It needs not to have a body or wicks. When a stock has opened and closed at the same price level, the candlestick forms a plus-sign shape Doji. If a stock's highest and lowest prices have never reached above and below the opening and closing prices, the candlestick has no wicks. A candlestick can have a large body or a small body as measured by the difference between opening and closing prices. A stock can also have long wicks or short wicks, upper or lower, based on how far the highest or lowest price has extended beyond the opening or closing price.
2. Interpret price movements as recorded in different shapes of candlesticks. A Doji shaped candlestick can serves as a reversal sign when combined with the right kind of upper and lower wicks. For example, a Doji with a long upper wick and no lower wick signifies that the stock eventually retreated from its highest price to a much lower closing price. Such a candlestick is referred to as a gravestone Doji. A candlestick can have a large body with no wicks, called Marubozo, which indicates a bullish movement or bearish movement depending on if the body is blank or shadowed. A candlestick of a blank Marubozo illustrates that the stock traded from its lowest opening price all the way up to the highest closing price.
3. Apply candlestick price interpretation in trend setting of multiple candlesticks. If a gravestone shaped Doji candlestick appears after an upward movement over a few trading periods, the stock may be ready for a downward reversal. Having reached a much higher point and then falling back to close at where it opened, the stock is losing the upward momentum it has been carrying. On the other hand, when a blank candlestick of large body with no wicks forms at the beginning of an uptrend, it is a bullish sign and the stock likely will trade further up, especially if the candlestick is in green with the stock closing higher than prior close.