Candlesticks And Stochastics by Greg Morris
Is it all hype and no substance, this candlestick business? This author says not. Here's a closer look.
Japanese candlesticks have added a new and exciting dimension to technical analysis. They offer
nothing that is not available in standard high-low bar charts as far as actual data displayed are concerned.
When it comes to visual appeal and the ability to see data relationships better, however, candlesticks are
exceptional. Coupled with a few popular indicators, candlesticks become even more powerful. After a
little practice and familiarization, candlesticks will become part of your analysis arsenal. You may never
return to standard bar charts.
TO REFRESH YOUR MEMORY
A candlestick line uses the same data that bar charts use: open, high, low and close. The thick part is
called the body and represents the range between the open and the close. If the body is white (not filled
in), it means the close was higher than the open. If the body is black (filled in), it means the close was
lower than the open. The thin lines above and below the body are called shadows. Shadows represent the
high and low of the day's trading range.