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Empowering the Individual Investors | ||
| CANDLESTICK CHART Stockbreakout uses candlestick charting to display stock prices in our charts. In our stardard chart below, some of the candlestick are circled. Candlesticks are just one of the charting method to indicate price movements on a chart. There is the western conventional bar chars but candlestick has overtaken barcharts as the prefered charting method in the current periods.
Candlestick Bar is an ancient Japanese Charting Technique to represent the stock's open, high,low and close for any particular day. Candlestick is an ancient Japanese Charting Technique that add dimension and color to the simple bar chart. The Japanese used Candlestick charting well before point and figure and bar charts were used in the west. In ancient Japan, candlestick charting was used by rice traders to trade rice futures contracts. REAL BODY The real body of the candlestick bar is the 2-dimensional rectangle made by the difference between the open and close of the trading day. The real body will be white on days that the stock closes higher than it opens, and red on days that it closes lower than it opens.
UPPER AND LOWER SHADOWS The upper shadow is the vertical line drawn from the top of the candlestick's real body to the day's high. The lower shadow is the vertical line drawn from the bottom of the candlestick's real body to the day's low.
There are many more details to candlestick trading especially with regard to their ability to predict turning points when used together with conventional indicators. There are some however, like legendary trader Larry Williams who don't think candlestick charting are any good other than decorating the chart. He has a point to a certain extent because in our research, we do find candlestick reversal principles valid only at extreme locations i.e after the stock has moved up or down to a significant level where reversal either short term or otherwise becomes imminent. In this site, our extreme locations for any stock are represented by our "X" boundary lines, we use the turning point (reversal) signals from candlestick at or above the "X" boundary lines in our "top-bottom" mode analysis. These candlestick signals are inbuilt as part of the formula that generate the buy and sell signals for the "top-bottom" mode. end...
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