Candlestick is a type of chart that represents price activity in a specific time range. The chart can be set to minutes, hours, daily, and weekly. There are basically four important elements in each candlestick: the opening price, the closing price, the highest price, and the lowest price.
When reading candlesticks, investors should focus on the colored part of the candle or the ‘body’. There are two kinds of bodies, red and green. The red one indicates a price decrease, while the green indicates a price increase. Additionally, the thin lines of the candlestick are shadows or wicks. The wicks show the highest and lowest price for the period.
Understanding the candlestick movement is essential because it allows investors to observe trends and patterns. Not only that, but candlesticks also allow investors to understand the psychology of the market, such as who is controlling the trade—the buyer or the seller. You can learn more about candlesticks and how to read their pattern in the following article.