This is kind of a weird week, right?
We just finished Christmas … Gifts are opened and bellies are full.
Some of us are hungover.
Some of us are just worn out.
But we’re happy.
It was fun … all the planning, shopping, wrapping, cooking and celebrating together. (As best we could this year.)
The last week of the year, a lot of us are on “vacation” or have shorter hours and less work.
For those of us working, everything is kind of on the light side.
We all need a break and some downtime before we even begin to think about those resolutions. Yikes!
And we still have New Year’s Eve to celebrate!
With that in mind, I don’t want to be too heavy or give you too much to think about.
But I did want to share something you can carry into the new year …
So here’s a short and sweet (and useful!) primer on the Japanese Candlestick …
Japanese candlestick technical analysis was developed by Munehisa Honma, a (legendary in some circles) rice merchant, and has been around for centuries.
However, it only arrived in the US in the early 1990s.
While the candlestick chart is financial, it actually helps track human sentiment, psychology and actions.
They are mainly used to detect a change in trend or sentiment and display that emotion visually.
Patterns formed by the candlesticks can help forecast short-term price direction and provide traders with an extremely helpful tool when making decisions.
Let’s take a look at the basic structure of a candle and what it’s telling us.
The red area is the body and represents the difference between the opening price and closing price.
The line at the top is the upper shadow and shows the highest price traded.
The line at the bottom is the lower shadow and shows the low for the session.
Candlesticks are color-coded to represent an up or a down session.
Red is down … Green is up. (They can also be black and white.)
A red candlestick is formed when the stock closes below the opening price, telling us the sellers had control.
A green candle forms when the buyers take over, meaning the stock closed above its opening price.
A candle with little or no body occurs when buyers and sellers were present in equivalent amounts. No one side took over.
Candles can represent days, weeks, or even five-minute intervals.
There are many different setups to learn to spot on a chart …
And I’ll teach you those indicators in future writings.
For now, let’s just keep it simple and this “weird week.”
Thanks for reading … See You Next Tuesday!
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