Japanese candlesticks: are visual formations for displaying price movement on charts over a specified time period. They were created by a famous Japanese rice trader named Munehisa Homma in the 18th century.
Japanese candlesticks differ from bar charts as well as line charts, as they feature characteristics that make them the top choice among price display systems on charts. Below, we will highlight their most prominent features.
2: The main features of Japanese candlesticks
They can be read very easily.
Provides traders with more information about the market condition during the candle time (for example, whether the price closed up or down, and the highest and lowest price of the market during that period).
Equips traders with patterns and formations, called Japanese candlestick patterns, that enable them to trade through them.
Let's take a look at the following illustration and compare the bearish candle (red) and the bullish candle (green):
Figure (1): An illustration of Japanese candlesticks and the information each candle displays
This simple illustration indicates all the information that Japanese candlesticks provide us, where the two displayed candles are: a bullish candle (green) and a bearish candle (red), and each candle shows the following information:
Opening price of the candle Open (i.e., the price at which the candle opened. Note that the opening of the bullish candle is at the bottom, while the opening of the bearish candle is at the top).
Closing price of the candle Close (i.e., the price at which the candle closed. Also note that the closing of the bullish candle is at the top, while the closing of the bearish candle is at the bottom).
Highest price reached by the candle High (which is identical in both candles).
Lowest price reached by the candle Low (which is also identical in both candles). Continuing ...
