Technical Analysis For Dummies
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Candlestick charting emphasizes the opening and closing prices of a stock security for a given day. Many candlesticks are simple to use and interpret, making it easier for a beginner to figure out bar analysis — and for experienced traders to achieve new insights.

candlestick chart

Become familiar with candlestick bar notation:

  • Open: The opening price.

  • High: The high of the day.

  • Low: The low of the day.

  • Close: The closing price.

  • Real body: The range between the open and close.

    The color of the real body shows how the struggle between buyers and sellers played out:

    • A white real body means the close is higher than the open. A white body is bullish (a buyer's market), and the longer the body, the more bullish it is. A long white candlestick indicates that the close was far above the open, implying aggressive buying.

    • A black real body means the close was lower than the open. A black body is bearish (a seller's market), and the longer the body, the more bearish it is. A tall black bar means the close was under the open and near the low, which may be hard to see on a regular bar but hard to miss in candlestick format; there was a preponderance of sellers throughout the session.

    What if the candlestick shows the open and close about the same? This configuration means you can't read supply and demand in the bar and should not trade the security on the basis of bar analysis.

About This Article

This article is from the book:

About the book author:

Barbara Rockefeller is an international economist and forecaster who specializes in foreign exchange. A pioneer in technical analysis, she also led the way in combining technical and fundamental analysis. Barbara publishes daily reports using both techniques for central banks, professional fund managers, corporate hedgers, and individual traders.

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