What are Japanese candlesticks?
Japanese candlesticks can be used for any time frame,, whether it be one day, one hour, 30-minutes – whatever you want!
They are used to describe the price action during the given time frame.
Japanese candlesticks are formed using the open, high, low, and close of the chosen time period.
- If the close is above the open, then a hollow candlestick (usually displayed as white or green) is drawn.
- If the close is below the open, then a filled candlestick (usually displayed as black or red) is drawn.
- The hollow or filled section of the candlestick is called the “real body” or body.
- The thin lines poking above and below the body display the high/low range and are called shadows.
- The top of the upper shadow is the “high”.
- The bottom of the lower shadow is the “low”.
If a Japanese candlestick has a long upper shadow and short lower shadow, this means that buyers flexed their muscles and bid prices higher. But for one reason or another, sellers came in and drove prices back down to end the session back near its open price. In the other case sellers forced prices to go down before buyers came in and drove prices back up.