A candlestick chart is simply a chart made up of candlesticks to describe the movement of price in a particular timeframe. This timeframe can be 1 minute or one hour or one day etc.

Price And Time Charts

How do you represent how price changes over time? With a price time-chart.

There are 3 main price times charts used:

1. a candlestick chart
2. a bar chart
3. a line chart

The only difference between a candlestick chart and a bar chart is the body: the candlestick chart has a body but a bar chart does not.

Candlestick Charts

Now, each candlestick in the chart represents 4 important information about how price moved during that time period:

1. the opening price.
2. the closing price
3. the high price
4. the low price

Bullish Candlestick

If a candlestick opened and closed at a higher price at the end of a period  or timeframe, that is a bullish candlestick.

Bearish Candlestick

If a candlestick opened and closed at a lower price then that  is a bearish candlestick.

 

Once you have all these bullish and bearish candlesticks form one after another in a chart, you have a candlestick chart.

Below is an example of a GBPCHF daily candlestick chart:

• each of these candlestick represents 1 day=24 hours. Once 24 hours is up, the next candlestick forms.

How To Read And Analyze A Candlestick Chart

Its really simple: if you see a lot more bullish candlesticks form in sequence in a chart, the trend will generally be an uptrend.

The opposite is also true: If you see a lot more bearish candlesticks in a candlestick chart, the trend will most likely be a downtrend.

The NZDUSD daily chart below gives an example of this…