Candlesticks have grown in popularity considerably over the last decade and a bit and originally a guy by the name of Steve Nison introduced them to the western world. Whilst the scope of candlestick charting is extremely wide and varied we are going to concentrate on what does a solid candlestick mean when looking at the charts.
The first thing you’ll note about candlesticks is that you can have open and solid candle and you usually have different colour candlesticks too, namely red and green.
An Open Candlestick
An open candlestick simply means that the closing price for the day closed higher than where it opened at, resulting in a rise in the share price between the open and the close.
A Solid candlestick
A solid candlestick means that the closing price for the day closed lower than where it opened at, resulting in a fall in the share price between the open and close.
A red candlestick
A red candlestick usually refers to a down day relative to the previous trading day. For example the previous day’s close was $25 and today it closes at $24 resulting in a red candle.
A greed candlestick
A green candlestick usually refers to a positive day relative to the previous trading day. For example the stock you are trading might have closed yesterday at $30 and today it closed at $31 resulting in a green candle.
An open red candlestick
An open red candlestick may be new to most people as their charting program may not have the functionality or depth to show these candles. An open red candlestick simply means the closing price today is lower than the close of yesterday but the closing price today is higher than the opening of the day.
A solid green candlestick
A solid green candlestick shows us that the closing price today is higher than the closing price of yesterday but the closing price today is lower than the opening price of the day. So as you can see, candlesticks can paint a very impressive and graphical picture and once you get used to them you’ll be able to see some advanced patterns to profit from.