Introduction to Candlestick Study: Origin and Market Psychology

Hello, everyone!

Starting a new topic here:

"candlesticks", I will share a little about the historical origin and how these charts reflect psychological factors in the financial market.

The Origin of Candlesticks

Candlesticks were created in Japan in the 18th century by Munehisa Homma, a rice trader. He developed this method to analyze price fluctuations in the rice market and understand the behavior of traders.

Why Are They Important?

Candlesticks are not just charts; they reveal the emotion of the market. Each candle represents the interaction between buyers (bulls) and sellers (bears), showing who dominated during that period.

Psychology in Candlestick Study

Candlesticks are also a way to study psychological factors, such as:

Fear and Greed: Sudden upward or downward movements usually indicate extreme emotions in the market.

Indecision: Candles like the Doji (where the opening and closing are very close) reflect uncertainty between buyers and sellers.

But what are Candles?

Candlesticks are visual representations of the price movement of an asset in a specific period (1 minute, 1 day, 1 week, etc.). Each candle tells us a story about the opening, closing, high and low price of the period.

Structure of a Candle:

1. Body: Indicates the difference between the opening and closing price.

Green body: The price rose in the period.

Red body: The price fell in the period.

2. Shadows (Wicks): Show the highest and lowest prices recorded in the period.

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Basic Types of Candles

1. Bullish Candle:

The closing price is above the opening price.

2. Bearish Candle:

The closing price is below the opening price.

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