An overview of Candlesticks
A candle shows how the price has changed over a certain amount of time, like one day or one minute. The main body of the candle shows the price at the start of the time interval and the price when the market closed at the end of the time interval. The length of the shadows shows how much the price has moved up and down in relation to a candlestick over a certain time period.
The body of the candlestick shows the difference between the prices at the beginning and end of the time period.
The market is where buyers and sellers fight it out. If one side is stronger than the other, the following will happen on the financial markets:
If there are more buyers than sellers, or if there are more people interested in buying than in selling, the buyers have no one to buy from. The prices then go up until they are so high that sellers once again think it’s a good price to get involved. At the same time, the buyers will stop buying when the price gets too high.
But if there are more sellers than buyers, prices will go down until the market is back in balance and more buyers come in.
“The faster the market moves in one direction, the bigger the difference between these two market players.” Prices change more slowly, though, when there is only a small overhang.
When there is an equal amount of interest in buying and selling, there is no reason for the price to change. At the current price, both sides are happy, and the market is in balance.
The goal of analysis is to compare the strengths of both sides to figure out which market players are stronger and, therefore, which way the price is most likely to move.
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