What are candlestick patterns?

Some traders prefer to see the thickness of the real bodies, while others prefer the clean look of bar charts. Candlesticks are created by up and down movements in the price. While these price movements sometimes appear random, at other times they form patterns that traders use for analysis or trading purposes. There are many candlestick patterns.

What are candlestick charts used for?

Candlestick charts are used by traders 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 of time the trader specifies. Many algorithms are based on the same price information shown in candlestick charts.

What does the'real body' on a candlestick mean?

The wide part of the candlestick is called the "real body" and tells investors whether the closing price was higher or lower than the opening price (black/red if the stock closed lower, white/green if the stock closed higher). Candlestick charts display the high, low, open, and closing prices of a security for a specific period.

How a bearish Candlestick is formed?

A bearish candle means that while the bulls tried to take the stock up, eventually the bears won the battle. This is why the close price is less than the opening price. Now that you understand how a bullish and bearish candlestick is formed, let us understand the eight basic candlestick patterns. Candlestick Patterns can be divided into –