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How do you read a candlestick chart?

The chart consists of individual “candlesticks” that show the opening, closing, high, and low prices each day for the market they represent over a period of time, forming a pattern. In order to read a candlestick chart, figure out what each different part of a candlestick tells you then study the different shapes to learn about market trends.

Where did candlestick charts come from?

Candlestick charts originated in Japan over 100 years before the West developed the bar and point-and-figure charts. In the 1700s, a Japanese man named Homma discovered that, while there was a link between price and the supply and demand of rice, the markets were strongly influenced by the emotions of traders. 1

What does the top of a candlestick represent?

The top of the wick represents the intra period high, while the top of the body represents the price at the start of the period. The bottom of the tail is the intraday low. One thing to note is the colours of the candlesticks themselves.

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