Identifying bullish and bearish candles on a Japanese candlestick chart is quite simple; they are primarily distinguished by their color and the relative position of the opening and closing prices. Here's how to recognize them:
Bullish Candles:
Color: They are usually represented in white or green. Some graphics allow you to customize the colors, but these are the most common.
Open-Close Relationship: The fundamental characteristic of a bullish candle is that the closing price is higher than the opening price during the time period represented by the candle.
Interpretation: A bullish candle suggests that there was more buying pressure than selling pressure during that period, resulting in an increase in price.
Visually on the chart: You'll see a white or green body with the bottom marking the open price and the top marking the close price. Wicks (if any) will extend above the close (high) and below the open (low).
Bearish Candles
Color: They are usually represented in red. As with bullish ones, the colors can be customized.
Open-Close Relationship: The fundamental characteristic of a bearish candle is that the closing price is lower than the opening price during the time period represented by the candle.
Interpretation: A bearish candle suggests that there was more selling pressure than buying pressure during that period, resulting in a decline in price.
Visually on the chart: You'll see a black or red body with the top marking the open price and the bottom marking the close price. Wicks (if any) will extend above the open (high) and below the close (low).
By looking at a candlestick chart, you can quickly identify the price direction during each time period simply by the color and shape of the candles. This information is crucial for technical analysis and trading decision-making.