What is a candlestick?

A candlestick is a type of chart used in technical analysis to represent the price movement of a security, such as a stock, currency, or commodity. A candlestick chart is created by plotting the high, low, opening, and closing prices of a security over a certain period of time using candlestick-shaped bars.

Each candlestick bar represents one time period, such as a day or an hour, and consists of a rectangular body and two wicks or shadows extending from either end of the body. The body of the candlestick is colored either green or white if the closing price was higher than the opening price, indicating bullish sentiment, or red or black if the closing price was lower than the opening price, indicating bearish sentiment.

The length of the wicks or shadows represents the range of price movement during the time period, with the top of the upper wick representing the high price and the bottom of the lower wick representing the low price.

Candlestick charts are popular among traders because they provide a more visually appealing and intuitive representation of price movement compared to traditional bar charts or line charts. Candlestick charts can also help traders identify patterns and trends in the market, such as bullish or bearish reversal patterns, that can be used to make trading decisions.