Japanese Candlestick Charting

Charting market data in candlestick form uses the same data available for standard bar charts; open, high, low, and close prices. While using the exact same data, candlestick charts offer a much more visually appealing chart. Information seems to jump off the page (computer screen). The information displayed is more easily interpreted and analyzed. The box below is a depiction of of a single day of prices showing the difference between the bar (left) and the candlestick(s).  

You can see how the name "candlesticks" came about. They look somewhat like a candle with a wick. The rectangle represents the difference between the open and close price for the day, and is called the body. Notice that the body can be either black or white. A white body means that the close price was greater (higher) than the open price. Actually, the body is not white, but open (not filled), which makes it work better with computers. This is so that it will print correctly when printing charts on a computer. This is one of the adaptations that have occurred in the West; the Japanese use red for the open body. The black body means that the close price was lower than the open price. The open and close prices are given much significance in Japanese candlesticks. The small lines above and below the body are referred to as wicks or hairs or shadows. Many different names for these lines appear in Japanese reference literature, which is odd since they represent the high and low prices for the day and are normally not considered vital in the analysis by the Japanese.

The same data in both the popular bar chart and in a Japanese candlestick format. You can quickly see that information not readily available on the bar chart seems to jump from the page (screen) on the candlestick chart. Initially, it takes some getting use to, but after a while you may prefer it.