To trade rice, the Japanese developed their own old-school type of technical analysis. That’s correct, rice.
Traders were also working hard back then. You traded rice for rock ice.
Steve Nison, a Westerner, “discovered” this secret strategy known as “Japanese candlesticks,” after learning it from a fellow Japanese broker.
Steve investigated, studied, lived, breathed, and ate candlesticks before beginning to write about it.
This secret approach gradually gained popularity in the 1990s.
To cut a long tale short, candlestick charts might have remained a buried secret without Steve Nison.
What are Japanese Candlesticks?
The best way to explain is by using a picture:
Japanese candlesticks can be utilized for any time period, such as one day, one hour, 30 minutes, or whatever you choose!
They describe the price action during the specified time window.
The open, high, low, and close of the chosen time period are used to create Japanese candlesticks.
If the close is greater than the open, a hollow candlestick (typically white) is drawn.
If the close is lower than the open, a filled candlestick (typically black) is shown.
The “true body” or body is the hollow or filled component of the candlestick.
Shadows are the thin lines projecting above and below the body that show the high/low range.
The “high” is the top of the upper shadow.
The “low” is at the bottom of the lower shadow.
Next Lesson: The Japanese Candlestick Anatomy