What is Japanese candlestick charting?


Japanese candlesticks reflect the emotions of traders by visually representing the size of market price movements using different colors. Traders utilize Japanese candlesticks to make their trading moves based on regularly emerging patterns that help predict the direction of the price in the short run. 

Similar to a bar chart, a Japanese candlestick also displays the market's open, high, low, and close price for the day. The candle consists of a wide part that is named the “real body”. 

The real body refers to a price range between the open and a close during one day of trading. If the real body of a candle is filled in or black, it indicates that the close was lower than the open. On the other hand, if it is empty, it tells us that the close was higher than the open. 

You can change the colors on your trading platform. For instance, you will often see that a down candle has a red color instead of black, and up candle can be green instead of white. 

Above and below the real body, you can spot the candle’s so-called shadows or wicks. The wicks display the highs and lows of that day of trading. So if the upper wick of a down candle is short it means that the opening price was near the high of the day, and the other way around.