Candlesticks

Candlesticks were first used by the Japanese as a method of price representation of commodities in the 1700s. After the collapse of the Dojima rice exchange, they were largely forgotten. However, Steve Nison resurrected the use of candlesticks in the 1960s and they have now become the mainstay of price representation. A candlestick is made up of a body and a shadow. The lengths of the body/shadow provide very important information about the activity of traders on a traded asset. Candlesticks display the open price, low price (lowermost part of the candlestick be it body or shadow), high price (uppermost part of the candlestick, be it body or shadow) and closing price.

Japanese candlestick chart

Chart showing different kinds of candlesticks. Each candlestick is made up of a body and a shadow. However, some candles do not have shadows (showing either strong selling or strong buying), and some do not have bodies (Doji candles).