Candlesticks, like humans, come in a variety of sizes. And nothing is more sinister in forex trading than inspecting the bodies of candlesticks!
Long bodies suggest aggressive buying or selling.
The greater the length of the body, the greater the purchasing or selling pressure. This suggests that either the buyers or the sellers were more powerful and grabbed control.
Short bodies suggest limited buying and selling activity. Bulls are purchasers in the trading world, whereas bears are sellers.
Long white Japanese candlesticks indicate a lot of buying pressure.
The longer the white candlestick, the greater the distance between the close and the open.
This suggests that prices rose significantly from open to close, and purchasers were aggressive. In other words, the bulls were really kicking the bears’ buttocks!
Long black (filled) candlesticks indicate a lot of selling pressure.
The closer the close is to the open, the longer the black Japanese candlestick.
This suggests that prices fell dramatically from the start and that sellers were active. In other terms, the bears were grabbing the bulls by the horns and slamming them to the ground.
The upper and lower shadows on Japanese candlesticks reveal crucial information about the trading session.
Upper shadows represent the session high.
Lower shadows indicate a low session.
Candlesticks with extended shadows indicate that trade occurred far after the open and closure.
Japanese candlesticks with short shadows suggest that the majority of trade activity occurred near the open and close.
A Japanese candlestick with a lengthy upper shadow and a short lower shade indicates that buyers exercised their muscles and bid greater prices.
But, for whatever reason, selling came in and drove prices back DOWN, bringing the session to a close near its opening price.
A Japanese candlestick with a lengthy bottom shadow and a short higher shade indicates that sellers displayed their washboard abs and pressured the price lower.
But, for whatever reason, buyers poured in and drove prices back UP, bringing the session close to its open price.
Next Lesson: Basic Japanese Candlestick Patterns