Part One.
Japanese Candlesticks are really quite
easy to understand. I want each of you to go into this primer with
that knowledge. Price information can be visually presented in a
number of ways: Japanese Candlesticks are but one of them
Since you are a Common Sense Commodities
student, you already have an excellent foundation in bar charts. Bar
charts represent the exact same information that candlesticks do, but with
some slight differences. The main one being color.
The color of a candlestick represents where prices closed, it is similar
to the right tick on the bar chart. Below is a down bar.
As you can see, the right
tick (highlighted) is lower that the left one, signifying a down
close. This is straight from Lesson One in the course manual.
Here is the corresponding
candlestick:
Instead of the tick to the
right signifying a lower close, we have a red (or in some cases black)
shaded in "candle".
Let's go over the
terminology of the candle itself. First you have the
"body" of the candle. That is the shaded in portion of the
candle, regardless of color. The red portion of the candle above is
the "body". Next, you have the "wicks". Now
you may be getting an idea of why they are called candlesticks! The
"wicks", either above the body or below the body, represent the
high and low. So the wick above represents the high and the wick
below represents the low. This is regardless of the color of the
body. So you see, this is very similar to bar charts!
Here is an example of an up
candle or a candle with a higher close with the corresponding bar next to
it. Look at the bar chart and imagine it is shaded in green and you
have a up candlestick! Both
of these simply represent a higher close!
 
Not too tough is it?
The only difference in appearance to the red/down candle is that an up
candle is shaded green (or sometime hollow/white depending on your charts)
to signify the higher close.
Click here to go to Part
Two.
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