Candlestick Chart

Candlestick chart

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A candlestick chart is a style of bar-chart used primarily to describe price movements of an equity over time.

It is a combination of a line-chart and a bar-chart in that each bar represents the range of price movement over a given time interval. It is most often used in technical analysis of equity price patterns.

|Contents |

|[hide] |

|1 History |

|2 Candlestick Layout |

|3 Patterns |

|3.1 Simple Patterns |

|3.2 Complex Patterns |

|4 Scientific Explanation |

|5 See also |

|6 External links |

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History

Candlestick charts are said to be developed by a legendary Japanese rice trader named Munehisa Honma in the 17th century to have an easy overview of open, high, low and close market prices over a certain period. This charting style is very popular because of the level of ease in reading and understanding charts it provides. Since the 17th century, there has been a lot of effort to relate chart patterns to the likely future behavior of a market. This method to chart prices proved to be particularly interesting due to the fact that four datapoints could be displayed instead of one single datapoint, thus containing more information. Those Japanese rice traders also found that the charts resulting from those candlesticks would provide a fairly reliable tool to predict future demand, thus giving them the chance to take advantage of future price fluctuations.

Steve Nison's book Japanese Candlestick Charting Techniques (ISBN 0735201811)...