Glossary Term

Candlestick Chart

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Candlestick charts are a type of chart used since the 19th century, they were developed by Japanese rice traders and have been in use ever since. Each candlestick chart is represented by a vertical rectangular candle, or ‘real body’ and a pair of vertical lines, or ‘wicks’, one at the top and one at the bottom of the rectangle. Candles come in two colors, red and green (traditionally black and white). For a candle to be green it has to open and rise in price before it closes (i.e. its opening price is at the bottom of the rectangle and its closing price is at the top of it). The opposite is true of red candles. For a candle to be red it has to open and fall in price before it closes (i.e. its opening price is at the top of the rectangle and its closing price is at the bottom of it). Each candle provides 4 key pieces of information, the asset’s opening price, its closing price, the highest price it reached during the period and the lowest price it reached during the period.

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