Candlestick Basics

 

Candlestick charts are an effective way of visualizing price movements. There are two basic candlesticks:

• Bullish Candle: When the close is higher than the open (usually green or white)


• Bearish Candle: When the close is lower than the open (usually red or black)

Candlestick Parts

There are three main parts to a candlestick:
Upper Shadow: The vertical line between the high of the day and the close (bullish candle) or open (bearish candle)

Real Body: The difference between the open and close; colored portion of the candlestick
Lower Shadow: The vertical line between the low of the day and the open (bullish candle) or close (bearish candle)

(see: Bearish Engulfing Pattern).