For those who are new to technical analysis or candlestick charts here is a quick course in reading them. Candlesticks measure the price movements of a stock (or other equity) over time. The four points that are recorded are: Open, Close, High, & Low. The following chart from Investopedia illustrates these.
As described by the arrow pointing to the Body, a black candle (sometimes displayed as red) will indicate a stock closed lower than it opened. A white candle in contrast (sometimes displayed as green) indicates the stock closed higher than it's open. Wicks on the top and bottom record the highs and lows of the session.
It is important to know that a candle's body is not derived by comparison to the previous candle. In the following example you will notice that although the last candle of the chart closed lower than the previous day -- it is still a green (white bodied) candle because its close was above the open.
The timeframe of each candle is defined by the chart you are reading. A daily chart will have the Open, Close, High, & Low for each day. A weekly chart records the same data but on a weekly basis. A 5-minute intraday chart records prices on 5-minute intervals. The vast majority of candlestick charts are viewed as daily charts.
There we have it... the first post. I'm looking forward to your interaction as we discuss the technical aspects of trading and begin applying them to our personal trading plans. I hope you enjoy Trading by Candlelight!
