Candlestick Chart
A price chart that displays a security's open, high, low, and close for each period using rectangular candle shapes, with upper and lower wicks showing price extremes.
What is Candlestick Chart?
A candlestick chart is a type of financial chart originating in 18th-century Japan that displays four data points for each time period: the opening price, closing price, highest price (upper wick), and lowest price (lower wick). The rectangular body of the candle spans from open to close — colored green or white when the close is above the open (bullish), and red or black when the close is below the open (bearish). Candlestick patterns are central to technical analysis, with dozens of named formations believed to signal potential reversals or continuations. Common patterns include the doji (indecision), hammer (potential bottom), shooting star (potential top), and engulfing patterns. Candlestick charts are now the dominant chart type in retail and professional trading platforms globally.
Example
In October 2023, several major S&P 500 stocks formed bullish hammer candlestick patterns — where price fell sharply intraday but recovered to close near the session high — on the same day that the index tested a key support level. Technical analysts viewed the hammers as evidence of strong buyer absorption at the lows, and the subsequent multi-month market rally from that point added credibility to the pattern's signal.
Source: Investopedia — Candlestick Chart