Types of Candlesticks

Candlestick charts are used to read the stock market. Stock markets use red and green colored candlesticks, which are rectangle shapes with a vertical line at the top and bottom called shadows. The shadows resemble the wick of a candlestick. According to Action Forex, the 21 principal candlestick types should be used in combination with other trend indicators. Candlesticks provide a technical analysis of the market, and used alone, are not enough as economic indicators and trading fundamentals are critical elements for market fluctuations. A green candlestick represents a bullish market while red indicates a bearish market.

Long and Short Periods

Long periods have a long candlestick body with very short shadows at one or both ends. The short shadow indicates the market was one-directional during that time period. Short candlestick bodies indicate very little price movement between the opening and closing prices during that trading period. Short shadows are at either end of the body during a short period.

Marubozu

The green and red Marubozu are long candlestick bodies with no shadows at the ends. A Marubozu means the low price was at the market open and the high price was at the market close. This indicates continuing or a reversal of trends.


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