Candlestick charts

Candlestick charting originated in Japan centuries ago. It was used to convey information about price action in the Osaka rice markets. Candlestick techniques have developed and are the main price chart used in Asian markets, as well as being extremely popular in Western markets.

Some traders have the mistaken belief that candlesticks provide more information than bar charts. That is not correct and a good trader who understands short-term analysis and is able to assess the relative strength of the bulls and the bears sees the same information in both charts. The advantage of candlesticks, however, is their graphic nature; it is very easy to quickly see the size of the bodies of the candles and the shadows on the top or bottom.