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Candlesticks

The document discusses candlestick charts, which use candlestick patterns to visualize open, high, low, and close price data over time periods. Candlesticks can indicate buying and selling pressure based on their color (white or black) and length. Specific patterns like marubozu, spinning tops, hammers, and harami positions provide insight into market indecision or momentum. Candlestick charts visually condense price action and are easier to interpret than simple line charts.

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Rishi Charan
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24 views15 pages

Candlesticks

The document discusses candlestick charts, which use candlestick patterns to visualize open, high, low, and close price data over time periods. Candlesticks can indicate buying and selling pressure based on their color (white or black) and length. Specific patterns like marubozu, spinning tops, hammers, and harami positions provide insight into market indecision or momentum. Candlestick charts visually condense price action and are easier to interpret than simple line charts.

Uploaded by

Rishi Charan
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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CANDLESTICK

CHARTS

ALISHA BANSAL
G-07
FORMATION
 In order to create a candlestick chart, you
must have a data set that contains open,
high, low and close values for each time
period you want to display.
 The hollow or filled portion of is “the body”
 The long thin lines above and below the body
represent the high/low range and are called
“shadows” , “wicks” and “tails”.
 The high is marked by the top of the upper
shadow and the low by the bottom of the
lower shadow.
 If the stock closes higher than its opening
price, a hollow candlestick is drawn
 If the stock closes lower than its opening
price, a filled candlestick is drawn
LONG VERSUS SHORT BODIES

 The longer the body - more intense


the buying or selling pressure.

 Short candlesticks - little price


movement

 Long black candlesticks show strong


selling pressure.

 Long white candlesticks show strong


buying pressure.
MARUBOZU

 Marubozu do not have upper or lower


shadows and the high and low are
represented by the open or close.
 A White Marubozu forms when the open
equals the low and the close equals the
high. This indicates that buyers controlled
the price action from the first trade to the
last trade.
 Black Marubozu form when the open equals
the high and the close equals the low. This
indicates that sellers controlled the price
action from the first trade to the last trade.
LONG VERSUS SHORT SHADOWS

 Upper shadows represent the


session high and lower
shadows the session low.
 Candlesticks with short
shadows indicate that most of
the trading action was
confined near the open and
close.
 Candlesticks with long
shadows show that prices
extended well past the open
and close.
SPINNING TOPS

 Candlesticks with a long upper shadow,


long lower shadow and small real body
 Spinning tops represent indecision.
 The small real body shows little
movement from open to close, and the
shadows indicate that both bulls and
bears were active during the session.
 Even though the session opened and
closed with little change, prices moved
significantly higher and lower in the
meantime. Neither buyers nor sellers
could gain the upper hand and the
HAMMER AND HANGING MAN

The Hammer and Hanging Click icon to add picture


Man look exactly alike

 Have different
implications based on the
preceding price action.

Both have small real


bodies (black or white), long
lower shadows and short or
non-existent upper shadows.
INVERTED HAMMER AND
SHOOTING STAR

 The Inverted Hammer and


Shooting Star look exactly
alike, but have different
implications based on
previous price action.

 Both candlesticks have


small real bodies (black or
white), long upper shadows
and small or non-existent
lower shadows.
CANDLESTICK POSITIONING

STAR POSITION

A candlestick that gaps away from the


previous candlestick

The two candlesticks can be any combination


of white and black. Doji, hammers, shooting
stars and spinning tops have small real
bodies, and can form in the star position.
HARAMI POSITION

 A candlestick that forms within the real


body of the previous candlestick is in
Harami position.
 The first candlestick usually has a large
real body and the second a smaller real
body than the first.
 The shadows (high/low) of the second
candlestick do not have to be contained
within the first.
CANDLESTICK CHART
ADVANTAGES

 Visually appealing
 Easier to interpret
 Easy-to-decipher picture of price
action
 Can compare the relationship
between the open and close as
well as the high and low
LIMITATION

Candlesticks do not reflect the sequence of events


between the open and close, only the relationship
between the open and the close.
THANK YOU

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