If the candlestick chart is black and white, then the body will be hollow for markets that went up.
If the candlestick chart is black and white, then the body will be filled in with black for markets that went down.
It’s important to make sure you know what the candlestick colors represent before you check the open and close prices to ensure you aren’t getting them confused. Always double-check the settings or the color key for the app or platform you are looking at the charts in.
For instance, if you are looking at a candlestick with a red body, then you know the price is going down, which means that the closing price is at the bottom of the candlestick’s body instead of at the top.
If there is no upper shadow, then the highest price is the same as the opening or closing price, depending on whether the market is trending up or down.
If there is no lower shadow, then the lowest price is the same as the opening or closing price, depending on if the market went down or up.
The further the closing price of a long-bodied candlestick is above the opening price, the more aggressive the buyers were for that market. If the closing price is far below the opening price, then it means the sellers were more aggressive.
If a candlestick has both a long upper and lower shadow with a short body, then it is called a spinning top. This kind of candlestick indicates that prices moved up and down a lot during trading, but neither buyers or sellers dominated the trading session.
If you see a spinning top candlestick with shadows of equal lengths after a long incline or decline period for a market, it can sometimes represent a reversal in the trend.
For example, if a doji candlestick appears after a long declining candlestick, then it means that selling pressure is decreasing and an upward trend might be coming. If it appears after a long upward trending candlestick, then it means that buying pressure is decreasing and the market might start trending downwards. Doji candlesticks that have both long upper and lower shadows indicate that there is a lot of indecision in the market.
Keep in mind that these shapes are more significant when viewing charts over a longer time period. For instance, if you see a hammer on a 1-day candlestick chart, it isn’t as important as if you see it on a 1-week uptrend. To identify possible changes in trends by spotting certain candlestick shapes, it is always best to look at a candlestick chart for the last 1-4 weeks of activity.
To identify possible changes in trends by spotting certain candlestick shapes, it is always best to look at a candlestick chart for the last 1-4 weeks of activity.
