The Japanese developed a method of technical analysis to analyze the price of rice contracts. This technique is called candlestick charting. Steven Nison is credited with popularizing candlestick charting and has become recognized as the leading expert on their interpretation.
What do Candlesticks Look Like?
Candlestick charts are much more visually appealing than a standard two-dimensional bar chart. As in a standard bar chart, there are four elements necessary to construct a candlestick chart, the OPEN, HIGH, LOW and CLOSING price for a given time period.
Below are examples of candlesticks and a definition for each candlestick component:
The body of the candlestick is called the real body, and represents the range between
the open and closing prices.
A black or filled-in body represents that the close during that time period was lower
than the open, (normally considered bearish) and when the body is open or white, that
means the close was higher than the open (normally bullish).
The thin vertical line above and/or below the real body is called the upper/lower
shadow, representing the high/low price extremes for the period.
Bar Compared to Candlestick Charts