The Basic Explanation about Japanese Candlesticks

Before you proceed on trying to read this post, it is fully expected that you are already familiar about your trading platform and you played with the three different types of charts which are the Line, Bar and Candlesticks

Anyway, the main focus of this post is all about the Japanese Candlesticks. The other two types of charts are also useful but don’t provide much data as compared to our main subject.

Let’s have a brief explanation about the difference of these three types of charts. The Line Chart is the simplest among them where it simply plots the highest and lowest prices in the form of a line. 

The Bar Chart provides exactly almost the same type of data as compared to the Japanese Candlesticks but its appearance makes it hard enough to read and can be very confusing. 

Finally, the Japanese Candlestick is the best type of reference which is what we are about to discuss why?

Moreover, let’s give some credit to the creator of this genuine technical analysis tool. Candlesticks won’t exist without him. 

He is Steve Nison who was able to discover this reliable forex trading tool but with the help of his fellow Japanese broker. 

The popularity of the Candlesticks began around the 90s and has become the primary charting tool of every trader around the world.

How does a Candlestick look like?

If you are not sure among the three different types of charts on your trading platform on which is the Candlestick then below is an example.


Now, that you are sure about how does it look like then I suggest that you open your trading terminal to check it out. However, you might also notice the “Time Frame”. So what is it?

Time Frames are the division of time period which can be in minutes, hour, day, weeks, months and year. The uses of the Candlestick on these time frames have no limitations.

Going back to the image posted above, let me explain to you the parts of a Japanese Candlesticks:

The default or most commonly used customized color for reading Candlesticks is “White and Black”. A white type will only be formed when the closing price is above the open. 

When the opposite occurs where the close price is below the open, a black type of candle will be formed.

You must take note of the parts since I will be referring to them on my future tutorial and you don’t want to keep on trying to read this post again for a re-cap.

The rectangular shaped section is what they referred as the “Real Body” of simply body. On the ends are some thin lines poking above and below. 

These are called “Shadows” which indicates the High and Low prices.

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