There are three main advantages of candlestick charts compared with bar charts.
1. Candlestick charts more visual than on a bar chart (Visually immediate). Try once in a while you are using candle charts, it's easier to see what happened during that period, day, week, hour or minute.
With bar charts we need mental enough to do execution price. We need to say to ourselves,''tick to the left states where the price is opened, tick the right of states where where the price closed. Now I understand that the period of rise. "With a candlestick chart he did it all to you. You can use the energy fatherly analyze, not to describe what happens with prices.
2. With candles you can see the trends more quickly by finding out if it is light or colored candle. In the period of the trend we can explain with specifics regarding price formation.Candle making it easier to price a wide range comprehension during the day. Candlestick wide show something dramatic happens to the price. While a narrow price range may indicate there is little agreement on price.
3. Most importantly, the candlestick is vital to show the direction of market movements that turn. This usually happens in the short term, to be more precise please find these things when your own trading. When told about the reversal of traditional techniques, it is usually associated with the pattern that occurred during the period of time. Typical is the double top reversal pattern as well as head and shoulders. As a definition, it involves the distribution of the smart money on the price to the naive traders and normally occurs within a few weeks or months.
Candlestick accurately able to describe changes in a trend which occurred at the end of each swing in the short-term period. If you carefully pay attention to often candlestick signals to you regarding the changes occurring.
Below is the data for three months of Bar Chart and Candlestick Chart for IBM's stock price. Consider the two graphs is whether there are differences on the data presented.
Hard as possible to show difference, it's because there is no difference. Both, bar charts and candlestick charts both contain exactly the same information, just presented in different forms. Both bar charts and candlestick charts contain the same data, the highest price within a certain period (daily), the lowest price, opening price, closing price.
In candlestick charts, the name alone is changed. The difference between the open price and closing price is called 'real body'. The prices are higher than the body called 'upper shadow' is a lower-called 'lower shadow'. If his candle light or white it means the opening price is lower than the highest price in that period. If a dark-colored candle shall mean the price moves down. As the picture below.
Optimism and Pessimism shown by Candle Market
In general we know that at the time of opening the price is usually dominated by the amateur trader or novice trader. On the other side's closing price is dominated by professional traders. The lowest price may be said that the price was established by the traders who are pessimistic, they believe that the market likely will fall further and make the position of selling at the base/ bottom. The highest price was established by the pessimists. They paid the top price but they are not correct in their analysis, at least in the short term.
The candlestick users may understand the combined concept. Here will be given one example, but you can experiment further with your own ideas.
Shaven Bottom/ Shaven Head. Shaven Bottom/ Shaven Head described the period in which prices opened lower and closed above. A period in which amateurs are also pessimistic. They sell them at the beginning immediately devoured by the voracious buyers. And at the end of the period of professional traders who are optimistic and at prices close sharply higher. And this bullish candlestick can often predict the opening price for the period selanjunya.
