Reading Japanese candlesticks

CHAPTER SUMMARY

The idea in one minute

Each candlestick summarizes the open, close, high, and low over a period. The body shows the difference between open and close; the wicks show the extremes reached. Both its shape and its location matter when interpreting it.

What to remember

• A daily candlestick tells a different story from a five-minute one.
• The color depends on whether the close is above or below the open.
• Start with a broad perspective before zooming into detail.

Put it into practice

Choose a closed candlestick and identify its four prices. Then look at neighboring candles to describe the context without predicting the next move.