Understanding Japanese Candlestick Charts and OHLC Charts

Japanese Candlestick Chart

Japanese Candlestick is a type of financial charts, the modification of OHLC Chart. Candlesticks are usually composed of the body (black or white), and an upper and a lower shadow (wick): the area between the open and the close is called the real body, price excursions above and below the real body are called shadows. The wick illustrates the highest and lowest traded prices of a security during the time interval represented. The body illustrates the opening and closing trades.

If the security closed higher than it opened, the body is white or unfilled, with the opening price at the bottom of the body and the closing price at the top. If the security closed lower than it opened, the body is black, with the opening price at the top and the closing price at the bottom. A candlestick need not have either a body or a wick. The same as for Line Chart, timeline scale is the most common case for the X-axis of the Japanese Candlestick Chart.

OHLC Chart

The OHLC (Open-High-Low-Close) Chart is typically used to illustrate the movement in prices over time. Each data point is depicted as a vertical line representing the price range between the lowest and highest prices over a certain time period, with tick marks on the left and on the right indicating respectively the opening (first) and closing (last) price for the time unit in question. The color of each data point reflects whether the price decreased or increased during that period.

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