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Understanding Candlestick Patterns

Candlestick patterns are a type of price chart used in technical analysis, representing the high, low, open, and closing prices of a security for a specific time period. There are two main types of candlesticks: bullish, which indicates a price increase, and bearish, which indicates a price decrease. These patterns are important for traders as they offer insights into market sentiment and potential trend reversals.

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61 views2 pages

Understanding Candlestick Patterns

Candlestick patterns are a type of price chart used in technical analysis, representing the high, low, open, and closing prices of a security for a specific time period. There are two main types of candlesticks: bullish, which indicates a price increase, and bearish, which indicates a price decrease. These patterns are important for traders as they offer insights into market sentiment and potential trend reversals.

Uploaded by

kennedymulife3
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd

Introduction to Candlestick Patterns

What is a Candlestick?

A candlestick is a type of price chart used in technical analysis that displays the high, low, open, and

closing prices of a security for a specific period. Each candlestick represents a single time period

(e.g., one hour, one day).

Types of Candlesticks

Below are examples of bullish and bearish candlesticks with labeled components:

1. Bullish Candlestick:

- Open: The lower part of the body indicates the opening price.

- Close: The upper part of the body indicates the closing price.

- Wick: The thin line represents the highest and lowest prices reached during the period.

2. Bearish Candlestick:

- Open: The upper part of the body indicates the opening price.

- Close: The lower part of the body indicates the closing price.

- Wick: The thin line represents the highest and lowest prices reached during the period.

Page 1
Introduction to Candlestick Patterns

Importance of Candlestick Patterns

Candlestick patterns help traders make decisions based on price action. They provide insights into

market sentiment and potential trend reversals.

Page 2

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