Breakthroughs in Technical Analysis: New Thinking From the World's Top Minds

CHAPTER 4

Reading Candlestick Charts

YOSUKE SHIMIZU

 

 

There are many different kinds of stock charts in use, but candlesticks are probably the most common form in Japan. The name candlesticks comes from the practice of representing price movements with white and black sticks that look like candles, particularly the form with a white box on the bottom and a thin line extending upward.

This style of charting is considered to have its roots in the Edo-period rice markets of Dojima (near modern-day Osaka). Historians estimate that they took their present form in the latter half of the Meiji period (late 1800s). Originally, they were just sticks drawn in red or black.

What Are Candlesticks?

Let’s start by looking at how candlesticks are drawn. ...