Japanese Candlesticks have been around for centuries. In use since the early 1700′s Japanese candlesticks were first used to trade the rice markets. Over the last 400 years of course they have become popular to many including stock and forex traders.

Japanese candlestick charts display market sentiment like other charts but most would agree you get a little more insight from a candlestick chart. Basically you measure 2 parts of a candlestick, the body, and the wicks. The body can be either full or hallow, and the wick or shadows, can be long or short, or not present at all. All tell a story.

Your highs and lows for the session are marked by the tops (high) and bottoms (low) of the wicks. Likewise a close that is greater than an open is represented by a hallow candlestick the bottom is the open, and the top is the close. A close that is less than the open is represented by a full or black candlestick. The top is the open and the bottom is the close. (See below.)

Candlestick charts are considered more eye appealing and easier to understand than the ordinary bar or line chart. They are more intuitive and easier to identify immediately, and they also show price action relative to the past. (Best left for another article.)

All candlesticks have a body and a wick or shadow, unless the open close high and low are equal to each other in which case you would have a little dash and that’s it. A white body is an empty body, and a black one is a full body. The empty/white body represents a close greater than the open, and a black/full body represents a close less than the open. The size of the body represents the distance between the open and close.

There are also candlesticks with full bodies and no wicks/shadows. These should be noted and have a name they are called Marubozu’s. The can be black or white (full / empty) and they appear when the open and close of the session are equal to the high and low. With the white/empty candlestick your high is equal to your close. With the black/full your low is equal to your close.

A long or short shadow with a short body are called spinning tops. Spinning tops represent indecision. The short body indicates that there was little change in the trading and the long shadows indicate there was a lot of activity with both bulls and bears. However it also indicates that neither buyer nor seller could get the upper hand, resulting in somewhat of a standoff.