Candlestick Patterns Origins
Candlestick charting first appeared in Japan over 300 years ago. Developed by a rice merchant named Munehisa Homma, it was originally used to track the rice trade.
Basic Candlestick Anatomy
Each candlestick has a body showing open and close prices and wicks representing high and low prices. The body's color indicates if the closing price was higher or lower than the opening.
Bullish vs Bearish
A white or green candlestick signifies a bullish period with prices closing above the open. Conversely, a black or red candlestick is bearish, with prices closing below the open.
Doji Candlestick Nuance
Doji candlesticks, where open and close are equal, suggest indecision in the market. Interestingly, their significance greatly increases when preceding other patterns, hinting at a potential reversal.
Engulfing Pattern Insight
The Bullish Engulfing pattern is a precursor to a market upturn, often observed after a downturn. It's recognized when a small bearish candle is followed by a larger bullish candle.
Hammer and Hanging Man
The Hammer and Hanging Man look identical but have different implications based on preceding price action. Hammers signal bullish reversals, while Hanging Man patterns indicate bearish reversals.
Rare Patterns Recognition
The Three White Soldiers and Three Black Crows are rare but reliable. They signal strong momentum in a direction, with three consecutive long-bodied candles without significant wicks.
Who developed candlestick charting?
A Japanese stock broker
A rice merchant
A European mathematician
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