What is a Japanese candlestick in trading?
When we talk about Japanese candlesticks we are referring to a graphical model of the price of an asset in the financial markets which is in the form of candles. In addition, they are also called Japanese candlesticks, which consist of a body and 2 wicks. The functioning of these Japanese candlesticks goes through a history with multiple faces.
The birth of the Japanese candlestick is due to a legend
A legendary merchant discovered that the rice market was influenced by the emotions of the merchants; what is japanese candle? You will find the answer to this question by reading this article. The effect of supply and demand on the price of rice was a major concern. Several theories and legends were therefore developed, always to fuel the debate about the supply and demand of rice in China. Also, this legend developed candlesticks that graphically show the nature of the price movements using various colors to make a difference on each stock. Traders whenever possible are likely to use candlesticks to read and identify the evolution of price patterns and make decisions about the evolution of these prices in the short term. As a legend in financial instruments, he reigned supreme in the rice market and became a household name, making his discovery of the candlestick charting method unique. At the beginning of the Japanese market in the 1870s, local technical analysts incorporated the candlestick methodology into the trading process. In technical indicator charting, the Japanese candlestick is the most popular one that traders use to analyze the financial markets.
The Japanese candlestick works in the classic way
In terms of detailed and accurate information about price movements compared to bar charts, Japanese candlesticks are the best in this field. They also provide a graphical representation of the supply and demand of the price action in each period. The area called the body is an area that each candlestick by their central parts indicates the distance between the opening and closing of the traded value. The upper part in shadow form is the distance of price between the top of the body and that of the trading period. It is possible to observe a replacement of the black and white colors of the body, such as red, green and blue. The use of automated trading platforms allows traders to choose their color.