What is a candlestick pattern?

In financial technical analysis, a candlestick pattern is a movement in prices shown graphically on a candlestick chart that some believe can predict a particular market movement. The recognition of the pattern is subjective and programs that are used for charting have to rely on predefined rules to match the pattern.

What is a daily candlestick chart?

Many algorithms are based on the same price information shown in candlestick charts. Emotion often dictates trading, which can be read in candlestick charts. Just like a bar chart, a daily candlestick shows the market's open, high, low, and close prices for the day.

Why do traders use Candlestick charts?

Traders use candlestick charts to determine possible price movement based on past patterns. Candlesticks are useful when trading as they show four price points (open, close, high, and low) throughout the period the trader specifies. Many algorithms are based on the same price information shown in candlestick charts.

Who invented candlestick charting?

Much of the credit for candlestick charting goes to Munehisa Homma (1724–1803), a rice merchant from Sakata, Japan who traded in the Ojima Rice market in Osaka during the Tokugawa Shogunate. According to Steve Nison, however, candlestick charting came later, probably beginning after 1850.