What information does a candlestick chart tell you?

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A candlestick chart may look simple, but it holds a treasure trove of information. Find out all about what candlesticks tell you.

Transcript

What information does a candlestick chart tell you? To understand this, let’s first look at a candlestick. The wide part of the candlestick is known as the real body. And the lines emerging from the real body are called shadows or wicks. In a daily candlestick, the upper wick tells you the highest price of a stock during the trading day, While the lower wick tells you the lowest price of the stock during the same day. The ends of the real body represent the open price and the close price of the stock. If the close price is higher than the open price, the real body is coloured in green. If the open price is higher than the close price, the real body is coloured in red. Then, there are volume candlesticks as well. Here, there's an extra dimension - the width of the candlestick - that tells you about the volume of the shares traded. So, a candlestick chart gives you information like the open price, the close price, the high price, the low price, and the volume of a stock traded during any given time period. Multiple candlestick charts even give you information about the trends in the stock price. They show you whether the trend for that period is bullish or bearish. Learn more about candlestick patterns in the coming chapter on Smart Money.