What is a Japanese Candlestick?

As we briefly discussed Japanese candlestick charting analysis in the previous FOREX LESSON, we’ll now dig in a little and talk them more in detail. Let’s do a quick review first.

Japanese Candlestick Trading

Come back to the day when Godzilla was still a cute little lizard, the Japanese created their own old school version of technical analysis to trade rice. That’s right, rice.
A Western meritorious named Steve Nison “discovered” this secret technique called “Japanese candlesticks,” learning it from a fellow Japanese broker. Steve researched, studied, lived, breathed, ate candlesticks, and began to write about it. Slowly, this secret technique grew in popularity in the 90’s. To make a long story short, without Steve Nison, candlestick charts might have remained a buried secret. Steve Nison is  known as Mr. Candlestick.

Okay, so what the heck are Japanese candlesticks?

Using picture is a the best way to explain:

Japanese candlesticks can be used for any forex time frame, whether it be one day, one hour, 30-minutes – whatever you want! They are used to describe the price action during the given time frame.

Japanese candlesticks are formed using the open, high, low, and close of the chosen time period.

• If the close is above the open, then a hollow candlestick (usually displayed as white) refers drawn.
• If the close is below the open, then a filled candlestick (usually displayed as black) refers drawn.
• The hollow or filled section of the candlestick is named the “real body” or body.
• The thin lines poking above and below the body display the high/low range and are named shadows.
• The top of the upper shadow refers the “high”.
• The bottom of the lower shadow refers the “low”.