How do you read a candle? The top or bottom of the candle body will indicate the open price, depending on whether the asset moves higher or lower during the selected timeframe. If the price trends up, the candlestick is often either green or white and the open price is at the bottom. viceversa if price trends down.
Why Candlestick is important? They indicate market turning points early and estimate the direction of the market. Overall, Candlesticks provide unique insights. They display reversal patterns which cannot be seen in other types of charts. They can be used in all kinds of markets.
Detailed Explanation :-
Real Bodies Each candlestick is composed of a real body and two wicks (which are also called shadows or tails). The real body is the substantial part of the candle. It reflects the difference between the open and close price for that period.
The open and close prices are the first and last transaction prices for that time period. When there is no real body or the real body is very small, it means the open and close prices were the same or almost the same.
The real bodies are typically one solid color, though they may also be hollow, with only their edges displaying a color. Their coloring depends in part on the color scheme used by your charting platform, but white/black and green/red are commonly utilized.
A white or green candle means the price finished higher over that time period. Because the closing price is higher than the open price, the bottom of the real body represents the open price and the top of the real body represents the close price.
A black or red candle means the price finished lower over that time period. Therefore, the top of the real body is the open price and the bottom of the real body is the close price for that time period.​
Wicks or Shadows The wicks or shadows—the thin lines above and below the real body—represent the movements above and below the open and close prices.
The highest part of the wick on top of the real body marks the high price for that period. If there is no upper wick, then the top of the real body was also the highest price during that period.
The lowest part of the wick on the bottom of the real body marks the low price for that period. If there is no lower wick, then the bottom of the real body was also the lowest price during that period.
The difference between the high and low prices is the price range for the period.
Not always the case as mentioned, Depends on the context while reading the candlesticks.
shindepn
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Very good explanation of the underlying mood!
But are these also be called as manipulated moods to trap the potential pray? How to judge is its a manipulated candle which could be a trap.... ? how to correlate it with the volume?
sankhyainvestments
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@shindepn, manipulation is a big word but widely used word in this line - these formations are individual's imaginations - some take it real moves some take it as manipulated moves… though in this industry, somebody is doing it, and never underestimate what the large players can and will do. (personal view)
whereas when it comes to its relation with volume - there are numerous books written for candlestick and volume study together which itself says it all -
candles when studied alone without any other parameters - is half study
prasadganesh
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@rachanak, which book do you suggest for candlesticks with volume
sankhyainvestments
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@prasadganesh u can pick any book of candlestick......each n every book is good in its way....one need to read and practice practically to get the real understanding
ShreeKrishna
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There is one More Candlestick pattern , We call it Kamikaze ( A Japanese Word ) its most dangerous candle you can see it in DR Reddy daily candlestick chart , they are Most Expansive volatile candles , ha ha