What are candlestick patterns?

    Quick Answer

    Candlestick patterns are visual representations of price action showing open, high, low, and close for a time period.

    Detailed Explanation

    Candlestick charts originated in 18th century Japan for rice trading. Each candle shows four prices: open, high, low, and close. The body represents open-to-close range (green/white if up, red/black if down). Wicks show the high and low. Specific patterns like Doji, Hammer, and Engulfing signal potential reversals or continuations.

    Key Points

    • 1Body shows open-to-close range
    • 2Wicks show high and low extremes
    • 3Green/white = bullish (close > open)
    • 4Red/black = bearish (close < open)
    • 5Patterns signal potential moves

    Example

    A Hammer candlestick has a small body at top, long lower wick (2x+ body), and minimal upper wick. Signals potential bullish reversal.

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