How to Read Candlestick Chart? - Easy Guide

 Hello...how are are you?

Well, today in this article I am going to cover one of the most important chapters in the field of trading i.e Candlestick.

What is Candlestick?

It is a graphical representation of the price movement of stocks, commodities & more.

This chart shows the emotion of buyers and sellers representing the size of price movement with different colours.

History


In 1700, a Japanese Rice trader named Munehisa Homma discovered that there was a link between the price, supply and demand of rice.



However, The chart was introduced in the western world by Steve Nison, when he wrote a book named Japanese Candlestick charting technique.

How to set Candlestick chart?

Here, To illustrate Candlestick I am going to use IQ Option.

If you don't have an IQ Option account Click Here.

You can also sign up via the form given below

 

You can sign up via the form above try....

Once you click the link above you will land on the IQ Option homepage.


Now, enter your email, password & click try now.

Once you have signed up. You will land on the IQ Option dashboard.


Now, click on chart type and select Japanese candlestick from the menu.




That's it the basic setup is over!! your dashboard will something like given below.




How to Read Candlestick Chart?

Just like a bar chart, a candlestick chart also shows the market open, high, low, close, open price for the day.

 Body: It represents the open to close range.

Wick or Shadow: It represents the Intraday High and low.

 Bullish Candle: It represents the buyer's candle.

 Bearish Candle: It represents the seller's candle.

 Closing Price: It is the last price that anyone pays for the particular stock during business hours.

Opening Price: It is the opening price of a stock when the market opens.

How to Read Candlestick?

Reading the Candlestick is damn very easy.

The golden rule of the candlestick says:

If the opening price is higher than the closing price then a Red candle is formed.

Similarly, If the closing price is higher than the opening price then a green candle is formed.

Example:

Suppose The price of Sugar today (Opening Price) is Rs. 45 which is greater than yesterday's price (Closing Price)  of Rs. 43. 

Now, If you are an intelligent seller what will you try to do is SELL more and more. because of which a very strong Red candle will appear.

Similarly, Suppose The price of Sugar today (Opening Price) is Rs. 43 which is lower than yesterday's price (Closing Price)  of Rs. 45. 

Now, If you are an intelligent buyer what will you try to do is BUY more and more. because of which a very strong Green candle will appear.

Winding Up:

So, this is the end of this article.

I hope you have found this article helpful.



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