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Candlestick Formation

Candlesticks formation has some normas and requirements , which needs to be followed to get the best and desired results.  To create a candlestick chart, you must have a data set that contains open, high, low and close values for each time period you want to display. The hollow or filled portion of the candlestick is called “the body” (also referred to as “the real body”). The long thin lines above and below the body represent the high/low range and are called “shadows” (also referred to as “wicks” and “tails”). The high is marked by the top of the upper shadow and the low by the bottom of the lower shadow. If the stock closes higher than its opening price, a hollow candlestick is drawn with the bottom of the body representing the opening price and the top of the body representing the closing price. If the stock closes lower than its opening price, a filled candlestick is drawn with the top of the body representing the opening price and the bottom of the body representing the closing price.

As per the analysis and comparison made by traders candlestick charts are more appealing and visually supported and easier to understand and interpret. Each candlestick provides an easy-to-decipher picture of price action which makes it easier to understand.   Immediately a trader can see and compare the relationship between the open and close as well as the high and low.  The relationship between the open and close can be categorized in two names i.e Hollow candlestick (close>open) which indicates buying pressure and Filled candlesticks(open>close) indicates selling pressure.

Posted by On 18/10/2009 Filed in: Share Market Basics Tags: , , ,
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