The Japanese candlestick charts provide information available from a line chart and a bar chart combined together. Each candle shows the opening price, closing price, lowest price and highest price of the session and this type of chart is preferred by many modern forex traders for it’s simplicity yet ability to deliver a lot of information.
A trader can assess the current market conditions quickly by looking at the shapes and formations of these candles. The colour of the candle also shows the trader whether the session opened and closed higher or lower, indicating a bullish or bearish session.
Candlestick charting was invented in the 18th century by a Japanese a rice trader, Munehisa Homma. This infographic provides the translation of the 3 candle formations which carry a Japanese name.