What Are Japanese Candlesticks?
Japanese Candlesticks are using for any time frame, daily, weekly, 1H, 30M…
What are Japanese candlesticks?
Japanese Candlestick represents price action in a certain time frame. For example, if we are using a 1H time frame, each candle on the char represents price action for 1H. When we switch the time frame to 30M, each candle represents price movement in 30M, etc.
The body of candlesticks is formed using high, low, open, and close for any chosen time frame.
- If the price closes above the open, then we have to buy a (long) candlestick. On our charts, it is a green candle.
- If the price closes below the open, then we have to sell a (short) candlestick In our examples it is a red candlestick.
- The center (filled part) is called the body.
- Thin lines up and down are called shadows.
- The upper shadow is high (the highest price reached in that period)
- Lower shadow represents low (the lowest price in that time frame).
There are many different candlesticks but in reality, it is simple to understand. Let’s start from the beginning.
Long candlesticks represent buying pressure.
Short candlestick represent selling pressure.
A longer body means that buying or selling pressure was strong. While a smaller candlestick body means smaller buying or selling.
Don”t be confused by different colors in different books, websites, trading platforms or videos. Traders usually use green, blue and white for buy (bullish) candlesticks. Red and black for sell (bearish) candlesticks. You can also find them in different colors but when you read this guide you will identify them easily.
Check the example below, the same chart with three variations of colors.
We are using green for buy and red for sell all over the website.
Looking at the chart above you probably notice the different shapes of candles. Price movement creates different shapes. Do you also notice shadows?
Japanese Candlestick Shadows
The upper and lower shadows on the candlesticks provide us with important information about the candlestick session.
Upper shadows tell us the highest price in the candlestick session.
Lower shadows tell us the lowest price in the candlestick session.
- If an upper shadow is bigger it means that buyers push the price strong but sellers pressure it down.
- If the lower shadow is bigger it means that sellers push the price but buyers fight back up.
Explore all candlestick patterns.