A candlestick chart (also called Japanese candlestick chart ) is a financial chart style used to describe price movements of a security, derivative, or currency. Each "candlestick" usually shows one day, so a one month chart can show 20 trading days as 20 "candlesticks". Shorter intervals of one day are common on computer graphics, as long as possible.
It's like a combination of line charts and bar charts: each bar represents four important pieces of information for the day: Open, close, high and low. Due to congested information, they tend to represent trading patterns over a short period of time, often several days or multiple trading sessions.
Candlestick charts are most commonly used in technical analysis of equity and currency price patterns. They are similar to box plots.
Video Candlestick chart
Histori
The candlestick chart was estimated to be developed in the 18th century by Munehisa Homma, a Japanese rice trader of financial instruments. They were introduced to the West by Steve Nison in his book, Japanese Candlestick Charting Techniques . They are often used today in stock analysis along with other analytical tools such as Fibonacci analysis (Fibonacci retracement).
In Beyond Candlesticks, Nison said, "However, based on my research, it is impossible for Homma to use candlestick charts.As will be seen later, when I discuss the evolution of candlestick charts, it is more likely that candlestick charts were developed at the beginning the Meiji period in Japan (in the late 1800s). "
Maps Candlestick chart
Description
Candlesticks usually consist of body (black/white or green/red), and upper and lower shadows (axis). The open and close intermediate areas are called native bodies , the price visits above and below the actual body is the shadow . Axis represents the highest and lowest prices of the securities during the time interval being represented. The body describes the opening and closing trade.
If the security closes higher than opened, the body is empty or unfilled, with the opening price at the bottom of the body and the closing price at the top. If security closes lower than opened, the body is solid or full, with the opening price at the top and the closing price at the bottom. The black (or red) candle represents the price action with the closing price lower than the previous wax closure. White (or green) candles show closing prices higher than previous candlesticks. Thus, the color of the candle shows the movement of the price relative to the closure of the previous period and the "fill" (solid or empty) of the wax represents the direction of the price of the period in isolation (solid for higher open and lower closures) to open lower and closer ). Candlestick does not need to have a body or a fuse.
To further highlight price movements, modern candlestick charts (especially digital ones) often replace black or white from the candlestick body with colors like red (for lower closures) and blue or green (for higher closures).
Candlestick pattern
In addition to the rather simple patterns depicted in the above section, there is a more complex and difficult pattern that has been identified since the beginning of the diagramming method. The complex patterns can be colored or highlighted for better visualization.
Instead of using open-high-low-close for certain time periods (eg, 5 minutes, 1 hour, 1 day, 1 month, 1 year), the candlesticks can also be constructed using open-high-low-close from a specified volume range (eg , 1,000; 100,000; 1 million pieces per candlestick).
Generally, the longer the body of the candle, the stronger the trade. The hollow body indicates that the stock closes higher than its opening value. The filled body signifies otherwise.
Usage
The candlestick chart is a visual aid for decision making in stocks, foreign exchange, commodities, and options trading. For example, when the slats are white and high compared to other time periods, that means the buyer is very bullish. The opposite is true for black bars. Candlestick charts serve as a cornerstone of technical analysis. The main use of candlestick patterns is to identify trends. Looking at the candlestick, one can identify the opening and closing price of the asset, the highest and lowest, and the overall range for a given period of time.
Heikin-Ashi candlestick
Heikin-Ashi (???, Japanese for 'average bar') candlesticks is a weighted candlestick version that is calculated by the following formula:
- Close = (open low close close)/4
- High = maximum height, open, or close (whichever is highest)
- Low = minimum low, open, or close (whichever is lowest)
- Open = (open the previous bar close the previous bar)/2
Heikin-Ashi candlestick should be used carefully with regard to price, as the body is not always synchronized with the actual open/close. In contrast to regular candlesticks, the long axis shows more strength, whereas the same period on a standard graph may show a long body with little or no axis. Depending on the software or user preferences, Heikin-Ashi can be used to map prices (not lines, bars, or candlesticks), as an indicator overlaid on a regular chart, or as an indicator plotted in a separate window.
Relation to plot box
Candlestick chart is similar to box plot. Both show the maximum and minimum values. The difference between them is the information delivered by the box between the max and min values. The upper and lower edges of the boxes in the plot box show the 75th and 25th percentile values ​​respectively. The bar in the box in the grid box shows the 50th percentile. The upper and lower edge of the box in the candlestick graph shows the start and end values, with the color of the box indicating whether the initial value is higher or lower than the final value.
See also
- The pattern chart
- Hikkake pattern
- Chart Kagi
- High-low-close-close chart
- Calculation of pivot point
- Spinning top (candlestick pattern)
References
Source of the article : Wikipedia
0 Comments