Candlestick charts are commonplace in trading. It doesn’t matter if it’s stocks, forex, commodities, futures or crypto. Some traders prefer open-high-low-close charts (OHLC), while others like dot charts. Some prefer the simple line charts, but there’s nothing like the story that candlesticks tell.
Looking at a multi-month stock chart full of candlesticks can be intimidating. It can also be confusing for those that aren’t familiar with them. Look at candlestick pattern.
Trading Candlestick Charts
Above is a weekly candlestick of Roku, clearly showing the footprint of the stock’s price action. The stock opened the week near $102.50, hit a low just over $100, a high near $113.50 and closed the week at $106.85. All of these levels are illustrated above.
A clear-colored candlestick shows that the stock advanced during the session (daily or weekly). Many platforms won’t use a “clear” candle, but a green one for positive days. Down days will be shown in red. That looks something like this.
It’s interesting that both sessions have a high of $10.15, but that’s not the point of showing the chart. The blue arrow shows the closing price of the prior session. In the most recent session, shares opened higher on the day but ended up closing lower. How do we know that?
Well, the candle is red, which is a pretty clear tell. But by knowing the color, we are able to decipher where the open and the close occurred.
Once you learn how to read these candlestick stocks, it will become like second nature to view them. Looking at a chart will show the history and “price action map,” and it will be as easy for you to read it as you would a written article.
Learning to read charts is a building block to trading. Hopefully this helps!
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