“Japanese candlestick” charting is the most popular type of chart for forex traders for it’s simplicity yet power to deliver a lot of information. A trader can assess the market trend and sentiment simply and quickly by looking at the shapes and formations of these candles, along with their colors. The time frame represented by a candle which closed higher than the opening price (bullish candle) will be a different color to one that closed at a lower than the opening price (bearish candle).
The candlestick charts provide information available from a line chart and a bar chart combined together. Each candle shows the opening price, closing price, lowest price and highest price of the session.
All of the best forex brokers provide charting software that displays candlesticks. You won’t have any trouble locating the option to change your display, in fact the candlestick charts might be the default for your platform such as MT4 and MT5.
Candlestick charting originated from Japan in the 18th century from a rice trader, Munehisa Homma. As such, some of the formations and candles carry over names which are Japanese. Here are the actual meanings of the names.