2. CANDLESTICK CHARTS
This chart is created much like bar charts, with the only difference being that candlesticks add dimension and colour to the Bar Chart by depicting the area of the bar between the open and close as a two dimensional real body.
The bodies of the candlesticks represent the difference between the open and close prices. An up candlestick occurs when the close is higher than the open – and down candlesticks occur when the close is lower than the high. In the chart example above, up candlesticks are green whilst down candlesticks are red. If the open is equal to the close there will not be a body, just a line – this type of candle is referred to as a “Doji”.
The thinner lines extending beyond the body are called ‘Wicks’ – above the body is the high and below the body is the low for the current timeframe. A large wick (relative to the body), indicates a potential turning point (support/resistance).