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How to Analyse Candlestick Charts for Intraday Trading? July 04 2022Stock Market Education

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Candlestick Charts for Intraday Trading

Trading is an art and not everyone can be successful at it. To become a profitable trader it is important to learn about reading the price charts. A chart represents the two most important inputs for technical analysis; price and volume. The data on the chart helps to visualize the price of a stock going forward. The Candlestick chart is one of the most popular charts used by traders. It is known as a candlestick chart because, in this type of chart, the price graph is represented in the form of a series of candles.

What does Candlestick Chart Comprise of?

Below is the graphical representation of a candlestick chart. In this chart, the price movement is represented in the form of candles. It consists of red and green candles. Each candle tells about the opening, closing and trading price range in a particular time frame. A trader can find out the appropriate time for entry and exit using a candlestick chart.


 

Different Types of Candles

On a candle stick chart, you will find red and green candles. Each candle reveals the price range in a different time frame. The red candle represents the closing price after the end of a particular time period that is lower than the opening price. Whereas, the green candle represents the closing price after the end of a particular time period that is higher than the opening price.

Body of Candle

The portion of the candle highlighted in red or green colour represents the body of the candle. The area of the candle comprises of opening and closing prices. In the red candle, the upper body is the opening price and the lower body is the closing price. On the other hand, in the green candle, the upper body is the closing price and the lower body is the opening price.

Candlewick

Candlewick means the upper and lower shadow on the candle. It represents the price range of stock in particular time duration. When the upper wick in a red candle is short it means that the stock has opened near the high of the day. When the upper wick of the green candle is short it means that the stock has closed near the high of the day.

Candlestick Chart Patterns

The candlestick chart patterns are one of the best ways to identify sentiments towards a stock. It helps in understanding the bulls and bear sentiment. By reading the chart patterns the trader can find out the price at which demand or supply would be higher and much more. When a single candle has so much information, then the patterns of the candle can give much more information. Pattern identification can be done by comparing a candle with the preceding candle and the candle that comes after it. This makes it important to understand candle patterns appropriately and with the right understanding, you will be able to make better trades in the stock market.

Different Types of Chart Patterns

The candlestick chart patterns can be divided into two parts; bullish pattern and bearish pattern. Bullish pattern includes hammer pattern, inverse hammer pattern, morning star pattern, bullish engulfing pattern, etc. The patterns that are useful in the bearish market include shooting star pattern, evening star pattern, hanging man, etc.

Before starting your trading journey you need to go learn the different candlestick chart patterns. This will help you in becoming a successful intraday trader and make your journey in the stock market profitable.

 

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