B Circle Entry丨Making it Easy for Beginners to Understand K Lines 《Free Sharing》
[Star R] Basic Components of K Lines
Opening Price: The initial transaction price of the trading day.
Closing Price: The final transaction price of the trading day.
Highest Price: The highest transaction price during the trading day.
Lowest Price: The lowest transaction price during the trading day.
K Lines generally consist of three parts:
Upper Shadow: Located above the K Line, indicating the price range between the highest price and the closing price (or opening price, depending on the nature of the K Line).
Body: Represents the price range between the opening price and the closing price. A bullish candle (red or white) indicates that the closing price is higher than the opening price, while a bearish candle (green or black) indicates that the closing price is lower than the opening price.
Lower Shadow: Located below the K Line, indicating the price range between the lowest price and the opening price (or closing price, depending on the nature of the K Line).
Shadow Length: The longer the shadow, the stronger the market's resistance or support in that direction. A longer upper shadow indicates greater resistance to upward movement; a longer lower shadow indicates stronger support.
Interpretation of K Line Combinations
Double Bottom and Double Top: A double bottom (W bottom) signals a market reversal from decline to rise; a double top (M head) signals a market reversal from rise to decline.
Head and Shoulders Bottom and Head and Shoulders Top: Head and shoulders bottom is a pattern of market reversal to the upside, while head and shoulders top is a pattern of market reversal to the downside.
Pregnant Line: The pregnant line usually indicates that the market may be about to reverse.
Doji: The doji indicates that the opening price and closing price are the same during that period, showing a balance of power between buyers and sellers. Appearing at high levels may signal a peak, while appearing at low levels may signal a bottom.
Red Three Soldiers and Three Black Crows: Red three soldiers consist of three consecutive bullish candles, indicating strong upward movement in the market; three black crows consist of three consecutive bearish candles, indicating weak downward movement in the market. However, it is important to note that three black crows during an upward trend may represent the accumulation of energy by the bulls.
Combining Position and Volume
Position: The position of the K Line is crucial for determining its nature. For example, a long upper shadow appearing in the early stages of an upward trend may indicate a trial by the main force, while a long upper shadow appearing at the end of an upward trend may signal a peak.
Volume: Trading volume is an important indicator for assessing market trends. In K Line charts, trading volume is usually analyzed in conjunction with the size or color of the K Line body. For example, a bullish candle with increased volume typically indicates sufficient upward momentum in the market.