(Introduction to candlesticks chart) Japanese candlesticks are like secret codes that tell us how much something is worth. They're way cooler than other charts because they show us what investors and traders think about stuff. But that's not all! These candlesticks also give us a peek into the minds of these traders and investors. We can see if they're scared, greedy, or hopeful just by looking at how the prices move. Before we dive into fancy candlestick patterns and how to use them for trading, let's first learn what each candlestick means on its own.
Big candlesticks mean lots of people buying or selling. The price went up or down really fast from the starting price (traders were really going for it). When we say a candlestick is "long," we mean the main part of it.
But, long compared to what? We can tell if a candlestick is long by comparing it to other candlesticks before it. A candlestick has to be clearly long to count as a real pattern. If you're not sure, it's probably not long "enough."
Small candlesticks can mean two things: either there wasn't a lot of trading going on, or there was a lot of uncertainty in the market (when buyers and sellers can't make up their minds.) We also compare these small candlesticks to what happened before to see if they are reliable or not.
Marubozu candlesticks are like strong superheroes in the world of trading. They are special because they don't have any shadows. This means that the starting price is the same as the lowest or highest price during a certain time period, and the ending price is the same as the highest or lowest price during that time period.
Now, the meaning of these special candlesticks can change depending on where they show up. If a bullish marubozu appears when the market is going down, it could be a sign that things are about to turn around and go up for a little while. It's like the bulls (the buyers) took control right from the start and didn't let go until the end.
But if a bullish marubozu shows up when the market is already at the top, it might mean that there's one last push upwards before things start going down. Of course, we have to look at the candlesticks that came before to be sure. The same goes for a bearish marubozu, which is like a sign that the market might start going down.
And here's a cool trick: if the marubozu breaks through an important level of support or resistance, it's likely that the market will keep going in the same direction as the break. It's like a big breakthrough moment!
So, remember, these strong marubozu candlesticks can give us hints about what might happen in the market. Just keep an eye out for them and the other candlesticks that come before. Happy trading, middle schoolers!
Doji candlesticks are like a battle between two groups of people in the stock market. It's when the opening price and closing price of a stock are almost the same. It's best if they are exactly the same, but what really matters is the overall picture. When the opening and closing prices are similar, it means that when the price went up, the sellers started taking control, and when the price went down, the buyers took control. Doji candlesticks by themselves don't really say if things are good or bad, but they should make you cautious. For example, if there's a downtrend and a doji candlestick comes after a long bull candlestick, it might mean that things could change and go up again.
Yo, check out these cool spinning tops and bottoms! They're like these tiny dudes with super long shadows that are usually bigger than their own bodies. These spinning tops and bottoms, also known as dojis, actually represent times when there's a lot of confusion and intense action happening between the bulls and bears in the stock market. It's like they can't make up their minds! So, these spinning tops and bottoms are considered neutral until a really long bull or bear candlestick shows up right after them. It's like a sign that things are finally getting clear and one side is taking charge.
So, there are these candlestick thingies that have long shadows at the top and bottom. And get this, the prices they start and end at are pretty much the same! It's like they're playing a game of tug-of-war between the bulls and bears, but neither side is winning. It's a real battle, you know? And there are these special doji candlesticks called Dragonfly and Gravestone. They're like the long-legged doji cousins or something.
So, there's this candlestick thingy, right? It's got a long shadow at the bottom and the prices at the top are pretty close together. At first, the bears were in charge and made the prices go down. But then, the bulls saw that the prices were low and they were like, "Hey, let's take control and make the prices go up!" So, the bulls won and made the prices go higher. That means this candlestick is more on the bullish side because the bears couldn't make the prices go lower. The bulls were too strong and made the prices go up instead.
There was this really tall shadow at the top, and the prices for opening and closing were both really low. At first, the bulls were in charge and made the prices go up, but then the bears came back and took control, making the prices go down again. This candlestick is a bit more on the bearish side because the bulls tried to make the prices go up, but the bears ended up making them go down instead.