Thursday, January 8, 2009
Candlestick chart: Short and Long Shadow
Short vs Long Bodies
The shadow both on the upper and lower side of bodies indicates important information on the trading the session. Upper shadow shows session high while lower shadow indicates session low. Short shadow candlestick indicates that trading action is limited near to Open and Close. Long shadow candlestick means that trading action advance well past open and close.
Long Upper Shadow and Short Lower Shadow :-
Buyer controlled the trading session, and bid prices higher. Later on, sellers forced the price down and this is followed by a weak close, thus forming long upper shadow.
Long Lower shadow and Short Upper shadow:-
Seller controlled the trading session, and push the price lower. Later on, buyer force the price up and this is followed by strong close, thus forming long lower shadow.
The shadow both on the upper and lower side of bodies indicates important information on the trading the session. Upper shadow shows session high while lower shadow indicates session low. Short shadow candlestick indicates that trading action is limited near to Open and Close. Long shadow candlestick means that trading action advance well past open and close.
Long Upper Shadow and Short Lower Shadow :-Buyer controlled the trading session, and bid prices higher. Later on, sellers forced the price down and this is followed by a weak close, thus forming long upper shadow.
Long Lower shadow and Short Upper shadow:-
Seller controlled the trading session, and push the price lower. Later on, buyer force the price up and this is followed by strong close, thus forming long lower shadow.
Wednesday, January 7, 2009
Candlestick chart: Marubozu
Diagram above indicates both black and white bodies without upper and lower shadow. This is known as Marubozu, and its characteristics:-
- The high and low are represented by open and close, in this case.
- White Marubozu, is represented by Open equals to Low and Close equals to High. This means that buyer control the price action from the start of trading to the last trade.
- Black Marubozu, is represented by Open equals to High and Close equals to Low. This means the seller control the price action from start of trading to the last trade.
- The high and low are represented by open and close, in this case.
- White Marubozu, is represented by Open equals to Low and Close equals to High. This means that buyer control the price action from the start of trading to the last trade.
- Black Marubozu, is represented by Open equals to High and Close equals to Low. This means the seller control the price action from start of trading to the last trade.
Tuesday, January 6, 2009
Candlestick chart: Short and Long Bodies
Longer body indicates more intense buying or selling force or pressure.
Shorter body indicates little price movement and represent consolidation
Shorter body indicates little price movement and represent consolidation
Long hollow (white) candlestick indicates:-
- Intense buying pressure.
- The longer the white candlestick, the higher level is the close above the open. In other words, prices went up appreciably from open prices and buyers are aggressive.
- Potential turning point or support level after an extended decline.
Long filled (black) candlestick indicates:-
- Intense selling pressure
- The longer the black candlestick, the lower level is the close below the open.
In other words, prices went down appreciably from open prices and sellers are aggressive.
- Potential turning point or resistance level after a long advance.
Introduction to Candlestick Chart
History
The Japanese started to use technical analysis to trade rice during the 17th century.
Guiding principles of this early version Technical Analysis share the same principles as US version initiated by Charles Dow during 1900. This includes:-
- The "what" (price action) is more important than the "why" (news, earnings, and so on).
- All known information is reflected in the price.
- Buyers and sellers move markets based on expectations and emotions (fear and greed).
- Markets fluctuate.
- The actual price may not reflect the underlying value.
According to another source believed to be Steve Nison, such charting of candle stick first appeared sometime after 1850. Candlestick development and charting was primarily the effort of rice trader named Homma in Japan. Over some period his initial idea were modified and refined, which results in the system candlestick that is used today.
Formation
Candlestick chart is created based on data set containing Open, High, Low and Close value for each time period.
“The body” of candlestick consist of either hollow or filled portion. Sometimes it is also referred to as “the real body”.
“Shadows” are the long thin lines above and below the body which stand for high/low range. This means high is represented by Top Upper Shadow and low is marked by Bottom of Lower Shadow.
Hollow candlestick means that the stock closes higher than its opening price. This is represented by bottom of the body as opening price and top of the body as closing price.
Filled candlestick means that the stock closes lower than its opening price. This is represented by top of the body and opening price and bottom of the body as closing price.
Advantages of Candlestick Charts:-
i) Easier to interpret and more visually appealing compared to traditional bar chart
ii) Provide clear picture of the price action, which allow trader to correlate between high and low as well as open and close. This information is important to feature of candlestick chart.
iii) Hollow candlestick, where close is greater than open, signify buying pressure, while filled candlestick, where close is less then open signify selling pressure.
The Japanese started to use technical analysis to trade rice during the 17th century.
Guiding principles of this early version Technical Analysis share the same principles as US version initiated by Charles Dow during 1900. This includes:-
- The "what" (price action) is more important than the "why" (news, earnings, and so on).
- All known information is reflected in the price.
- Buyers and sellers move markets based on expectations and emotions (fear and greed).
- Markets fluctuate.
- The actual price may not reflect the underlying value.
According to another source believed to be Steve Nison, such charting of candle stick first appeared sometime after 1850. Candlestick development and charting was primarily the effort of rice trader named Homma in Japan. Over some period his initial idea were modified and refined, which results in the system candlestick that is used today.
Formation
Candlestick chart is created based on data set containing Open, High, Low and Close value for each time period.
“The body” of candlestick consist of either hollow or filled portion. Sometimes it is also referred to as “the real body”.
“Shadows” are the long thin lines above and below the body which stand for high/low range. This means high is represented by Top Upper Shadow and low is marked by Bottom of Lower Shadow.
Hollow candlestick means that the stock closes higher than its opening price. This is represented by bottom of the body as opening price and top of the body as closing price.
Filled candlestick means that the stock closes lower than its opening price. This is represented by top of the body and opening price and bottom of the body as closing price.
Advantages of Candlestick Charts:-i) Easier to interpret and more visually appealing compared to traditional bar chart
ii) Provide clear picture of the price action, which allow trader to correlate between high and low as well as open and close. This information is important to feature of candlestick chart.
iii) Hollow candlestick, where close is greater than open, signify buying pressure, while filled candlestick, where close is less then open signify selling pressure.
Saturday, January 3, 2009
4th Jan 2009: The path begin..
My debut informative blog for myself and the rest as a beginner on investment.
Hope that information shared out from this blog will be a useful one, to dear readers and investors.
For a start, i will cover more on stock investment, of which i recent learned:
- What is stock market ?
- Opening Account
- Technical Analysis
- Informative source
Will shared out more info, once i compiled and verified.
Best Regards..
Hope that information shared out from this blog will be a useful one, to dear readers and investors.
For a start, i will cover more on stock investment, of which i recent learned:
- What is stock market ?
- Opening Account
- Technical Analysis
- Informative source
Will shared out more info, once i compiled and verified.
Best Regards..
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