The candlestick chart has Japanese origins and is probably the most useful of the three main chart types.
When reading a candlestick chart, it is important to understand the basic candle structure. Each candlestick represents a timeframe – this could be anything from one minute to an entire week.
Irrespective of the timeframe, a candlestick symbolises the following values:
- Opening price at the start of the chosen timeframe
- Closing price at the end of the chosen timeframe
- Peak price within the chosen timeframe
- Lowest price within the chosen timeframe
According to the opening and closing price, the candlestick can be used to decide whether a session finished ‘bearish’ or ‘bullish’:
- Bullish – The closing price was greater than the opening price
- Bearish – The closing price was less than the opening price