What are Japanese candlesticks?
Japanese candlesticks are a graphical representation, or chart, that is undoubtedly the most widely used by traders on a daily basis. Candlesticks provide us with a wealth of valuable information. For the record, this charting system was first developed in Japan as early as the 16th century.
Japanese candlestick charts are visually friendly because the body of the candles is full. These charts enable precise market analysis.
Have you looked at charts like this before and thought they look really complicated? They are in fact very simple to understand once you know how to interpret them, which we will help you to do here.
a. Candlesticks and time periods:
A candlestick corresponds to a period of time (in time frames). This time period can be modified on trading platforms depending on your investment goals or strategies. The most common time units used are the m1 (one minute per candlestick), m5, m15, H1 (one hour per candlestick), H4 and D1 (one day per candlestick).
b. Rising candlesticks:
Rising candlesticks are usually green or blue and indicate that the price level at the end of the time period is higher than it was at the beginning.
d. How a candlestick is made:
A candlestick is formed and evolves during its defined time period. As you can see below, a candlestick can go up, or down, in the same time period. In this case it is the Euro/Dollar (EUR/USD) rate. A candlestick only takes its final shape at the end of the time period.
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