Interpretation and Origins

The Candlestick - Origins and What are

Despite the name they have, the "Candles" or "Candlestick" is a Japanese source, the use of candles dates back to the beginning of the eighteenth century as a system that allowed detection of changes in rice prices. Several people were using this method but one that stands out was using candles Muneisha Homma, having gained much success using the method of candles led him to be recognized as a god of the markets.

Homma Muneisha dominated the rice market in Osaka, after which the market operates in Edo, where he says he was able to carry out 100 consecutive successful operations. Subsequent to this he was appointed financial adviser to the government, giving him the title of Samurai.

Homma Muneisha write two books, "Sakata Shenso" and "No Soba Sani Den," about the markets, these books were written in the eighteenth century which contained the principles that were used by him at the time of market arrox of these principles are now analyzing the origin of candles being used in the world. on markets that were written in the eighteenth century contains the principles used by him at the time of operation in the rice market, are now analyzing the origin of candles being used in the world.

Japan was a closed country to the world until very recently, so this form of analysis was not known in the world until he met Steve Nison introduced into the Western world, after having studied, invested tested first by typing on this analysis techniques. By the 90s this technique was gradually gaining adherents, to be popular today. But without the discovery of Steve Nison, the Technical Analysis of candles remain a hidden secret.

To begin to understand what a candle is the first thing we need to know is how the different parts and characteristics of a candles, as we see below.



Classical Form

This is the classic way of representing a Candlestick where we see a bullish candle that is represented by a white body and a candle with a bearish or black body. Candlestick with a white body for increases in the candlestick chart and with a black body for downhill in the graphic.

Interpretation of a candlestick

The classical form is not widely used because it can lead to confusion, which is why many operators often use the colors of candles, which helps us to differentiate between a bullish and a bearish candle Based just as in color.Bueno we have said many traders like the candlestick color and so we are going to see them in color.



Consider the interpretation that we will give 4 points to a candle which is the Open, Close, High and Low.

Interpretation

• Bullish Candlestick : The candle is bullish on which the closing price (Close) is above the opening price (Open), this candle is represented as a hollow (typically white, as we saw in its classical representation).


• Bearish Candlestick : The candle is bearish one in which the closing price (Close) is below the opening price (Open), this candle is represented by a solid body (usually black , see classical form).


• Body : The solid or hollow candle is often called the real body.


• Shadows : The lines that appear above and below the body of the candle shows the range high / low and these lines are known as Shadow (Shadow).
  
• High : It's the peak of the upper shadow (Upper Shadow), at this point is known as "High".
  
• Low : This is the minimum point of the lower shadow (Lower Shadow), at this point is known as "Low."