The candlestick is important for all investors/traders as it records all the details of the market within a given period. Candlestick charts are believed to have been developed in the 18th century by Munehisa Homma, a Japanese rice trader. They were introduced to the Western world by Steve Nison in his book Japanese Candlestick Charting Techniques, first published in 1991.

How to read the candlestick?

The attribute of the candlesticks:-

Open: The opening price within a certain period of time.

Close: The closing price within a specified time period.

High: The highest price reached within a given time period.

Low: The lowest price reached within a specified time period.

Body: The body includes the range between the opening price and the closing prices within a specified time period.

Shadow: The shadow is the extreme value that the price passed through during the life of a candle on a chart before closing at its final price.

The green candle represents a bullish candle, which means that the candle's closing price is above the opening price. The red candle represents a bearish candle, which means that the candle's closing price is lower than the opening price.

The time interval of a candlestick

The time interval has the 30s, 1 min, 5 min, 15 min, 30 min, 1h, 4hs, daily, weekly and monthly. All times represent the duration of each candle. For example, if you select daily, it means that each candle represents one day. If you select 15 minutes, each candle represents 15 minutes.

Investors/traders can choose different time intervals depending on their strategy. Day traders usually use 5-minute or 15-minute candles to take advantage of opportunities. They usually choose the peak time of the market to trade. Swing traders use hourly to daily candlesticks for trading. This is because the swing trader catches part of a potential price movement.

Basic Candlestick pattern

The candlestick pattern can also provide various information to the investor/trader. Here we will introduce and explain some basic candlestick patterns. These 3 candlestick patterns are a very popular reversal signal.

Engulfing candlestick

Engulfing is formed when the status of the second candle turns and completely covers the body of the first candle. This signal indicates the counterattack of the opposite ratio and this time the counterattack was so successful that it completely drowned out the previous candle.

Doji Candlestick

Doji is a reversal candlestick pattern that occurs when the open, low, and closing prices are close to each other. A Doji occurs when the opposite side attempts a counterattack and successfully narrows the loss gap.

Hammer Candlestick

The Hammer pattern is a Bullish/Bearish reversal pattern with a single candle that can be observed at the end of a downtrend. The opening price, the closing price, and the top are approximately the same prices, while there is a long wick that extends downward and is twice the size of the short body.

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