Candlestick Charts Explained

Candlestick charts are a form of technical analysis used by traders to look at the financial markets and share prices. A candlestick chart can vary in terms of the time period shown – be it on a per day or per minute basis.

However, generally such charts tend to denote the following information over a time period:

  • The opening price
  • The closing price
  • The highest point reached
  • The lowest point recorded

When looking at these charts, you will see a thin line running through the thicker part. This is like the wick of a candle and shows the highest and lowest points recorded. The bottom line is the lowest point and the top point is the highest.

The thick line or bar denotes the open price and closing price.

Therefore if the closing price was the same as as the lowest point, then the candlestick will not have a thin line extending out from the bottom.

The longer the candle is, the more volatile the share has been. The shorter it is, the more it indicates there has not been much movement in its share price.

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