Chapter 3
Candlestick Patterns
Candlestick patterns provide not only important information on the price movements of ETFs, but also key insight into the psychology of the market. In this chapter, we will elaborate on this concept.
What Is a Candlestick?
A candlestick is a charting technique that visually represents the opening, high, low, and closing prices of a security. The pattern resembles a candlestick and hence its name. These patterns are plotted on a chart each day (or other time interval) to reveal trends and possible price reversals in a security. Common candlestick patterns include doji stars, shooting stars, hanging man, and engulfing formations, to name a few. Both individual and clusters of candlesticks are used by market technicians ...
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