A candlestick in trading visually shows price movement for a set time, displaying open, high, low & close. Used to assess trends, sentiment, and possible reversals.
You can read by understanding the body, wicks & colour; green shows gains & red shows losses. Combine patterns with support/resistance & indicators for better trade decisions.
The main types of candlesticks are bullish, bearish, and neutral. Bullish signals upward moves, bearish indicates declines, and neutral shows indecision.
Candlestick charts visually reflect market sentiment, making it easier to spot trend reversals, continuations, and price rejections for effective technical analysis.
Candlestick charts can be subjective and may give false signals. They lack fundamental insights and need confirmation from other indicators for reliable predictions.
Candlestick charts use coloured bodies for price clarity, whereas bar charts use plain lines and ticks, making them less visually intuitive.
Visual Representation:
Candlesticks highlight trends with colour cues, while bar charts make trend spotting harder due to a lack of colour distinction.
Trend Identification:
Candlesticks show sentiment with green and red candles, whereas bar charts lack colours, making sentiment harder to gauge.
Market Sentiment:
Both show OHLC data, but candlesticks do it with bold visuals, while bar charts use minimal lines that require closer observation.
Data Displayed:
Candlestick charts provide clearer, detailed visuals, while bar charts are more basic and need more effort to interpret.
Clarity & Detail:
Candlestick charts are ideal for technical and short-term trading, whereas bar charts are used more in long-term analysis.
Use Case:
Candlesticks may seem complex initially, but are widely used, while bar charts are simpler but less insightful visually.
Complexity:
Common Mistakes are relying on patterns without confirmation, ignoring context, and overtrading, often leading to false signals and poor decisions.