Candlestick

Figure 1

The chart symbols used in candlestick charts are fairly easy to understand.
Candlestick charts get their name from the symbol used to represent the trading range in which you are charting (daily, weekly etc…), which are called candles. The candle has a wide area separating the open price from the closing price, which is called the body, Figure 1. On a trading day where the stocks price closed higher than its open, the candle will have an unfilled or clear body and on a day where the stock closes below the open price, the body will be filled (black in the example above). It’s important to keep in mind that a black candle does not necessarily mean the stock closed lower than the day before, just lower than the close. Conversely, a clear candle doesn't necessarily mean the stock closed higher than the day before, just higher than the open. On some charting software the unfilled bodies may be changed to green and the filled bodies to red. Many charting software also allow the user to change the colors themselves depending on their preference. The color of the body is not as important as the contrast between the two different candle types. For the illustrations in this article, we will use the traditional black and white bodies. On most candles there will be a thin line extending from the top and bottom of the body. The line extending from the top of the body represents the distance from the open or close (depending on the candle) and the high price of the day. Conversely, the line extending from the bottom of the body represents the distance to the low price. These lines are called the wicks, along with a variety of other commonly used names, such as whiskers
or hairs. Since candlestick theory puts its emphasis on the relationship of the open price, as compared to the closing price, the wicks rarely carry any technical significance. However, there are a few candles and patterns you will want to pay close attention to not only the wick, but also to the length of the wick.