Candlestick charting techniques were introduced by a world renowned seventeenth-century Japanese rice broker, Munehisa Homma. This man was among the first of his kind to look at price history and then use this information to predict future prices. It is said that Homma made 100 consecutive profitable trades. Since the invasion of this powerful trading tool, many investors have turned to candlestick charting to begin to understand a stock’s past and future movements a little better. Here are some examples of how a candlestick stem might look.

Advertise here.

Candlesticks can symbolize minutes, days, and weeks, etc. This depends on the time frame you wish your overall chart to display. In this graph we notice three displays. In the first, a clear, white, body is shown. The white means that in the given time period, the stock traded higher. The straight lines or “shadows” represent the trading range for that same time period as well. In the second display, a black body has formed indicating that the stock traded lower. Again, the lines extending from this body represent the overall range that the stock has traded. In the third display, one can see that the stock opened and closed on or around the same price. This type of symbol is called a “doji” and indicates that a change in trend or a reversal is about to happen. This symbol is very important and should be easily recognized.