How to understand any stock chart ( Japanese Candlesticks)


This is a stock chart. It’s a succession of points linked by a line.

Each point represents a period time, in this case 1 hour, so if you take 6 points you can analyze the price fluctuations in 6 hours. We can name each chart point “close price”, because when the hour closes, the stock price is that.

You can choose the time frame you want as 1 minute, 15 minutes, 4 hours, 1 day, a week, a month, etcetera…

The chart you can see at the screen is the most basic and is the least used because needs more information, it only says the close price at any period time but doesn’t say the real fluctuation. To sort it out we got the famous japanese Candlesticks.

In this example with japanese candles, we’ll select a 4 hours time frame.

At Twelve o'clock the stock price is Ten €.

At Thirteen o'clock the stock price is Thirteen €.

At Fourteen o'clock the stock price is Nine €.

At Fifteen o'clock the stock price is eleven point fifty €.

The first point is the open, in this case Ten €.

The last point is the close, in this case eleven point fifty €.

When we got an open price and a close price, the candle body is created.

The price went from 10 to eleven point fifty € in this period, so its value had increased, and the body must be green.

Also, we got intermediate points. which one was the maximum in that 4 hours? In this case, the maximum was thirteen €, and it’s represented by a wick above the candle body.

which other point was the minimum in that 4 hours? In this case, the minimum was nine €, and it’s represented by a wick below the candle body.

Let’s see another example:

At Twelve o'clock the stock price is Ten €.

At Thirteen o'clock the stock price is Twelve €.

At Fourteen o'clock the stock price is eight €.

At Fifteen o'clock the stock price is nine €.

The first point is the open, in this case Ten €.

The last point is the close, in this case nine €.

The price went from 10 to nine € in this period, so its value had decreased, and the body must be red.

which one was the maximum in that 4 hours? In this case, the maximum was twelve €, and it’s represented by a wick above the candle body.

which other point was the minimum in that 4 hours? In this case, the minimum was eight €, and it’s represented by a wick below the candle body.

In conclusion, if we see a chart with several green candles, we can clearly see that its value is increasing, and if we see several red candles, we can identify that the value is decreasing.

Mi name is Jaime Juez, Financial Advisor and Broker.

If you want to learn more about How to understand the stock charts and winning a statistical advantage investing in the stock market, go to the site BrokerJunior.com and subscribe for free to muy trading course online for beginners. Adiós Amigos!

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