A Brief Intro To 5 Important Candlestick Formations That Will Help With Your Stocks Trading

By Ian C Jackson

Bar charts are usually the first tool traders use to represent price movement for their chart analysis, and stand for a single time frame period. Japanese candlesticks are one of the biggest storytellers of all the price bar configurations. At first glance they can seem no more interesting than looking at stick people with two dimensional bodies, but when you start to investigate their characters, there's so much information they hold within their simple forms.
In the first instance, you have a hollow or solid body. The hollow body represents a price fall during a time frame and a solid body, a price ride. That is the usual convention anyway. If there are top and or bottom wicks, they demonstrate the extent of price fluctuation during the time frame.
Here are the meanings of 5 Japanese Candlestick forms:
1. A candlestick that appears just like a new candle, without any upper or lower wick to be seen is a sign of a strong bull market - if it is of solid appearance. One with a hollow or empty appearance is a strong sign of a bear market. A continuing trend in other words.
2. Sometimes you will see a flat horizontal line with no candlestick body at all. I thought it was an error in my software the first time I saw it, but it shows nothing more complicated than a day when there has been no price movement at all.
3. Dragonfly dojis have no body, but just a long wick hanging down from a horizontal line, rather like a long, narrow letter T. In trending markets they are a strong signal for a reversal of trend.
4. Gravestone dojis are the opposite way round from their dragonfly counterparts, also a signal for a trend reversal, but in the other direction.
5. All of the above have a significantly more profound meaning when viewed and used with adjacent candlesticks. One on its own tells a story, but several in a line, over a few days tell the story - with pictures too.
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