Candlestick charts have three distinct parts to them: the real body, the upper shadow and the lower shadow. These parts are defined by four markers: the low, the close, the open and the high.
The real body represents actual movement of the graph over a set period of time, be it a minute, an hour, a day, etc. The open shows where the value began. In a red candlestick, the open will be the top boundary of the body. The close represents where the value ended. In a red body, the close will be at the bottom. This is known as a decreasing bearish candlestick. In a green candle, it is the opposite way around. The open is on the bottom and the close is on the top — known as an increasing bullish candlestick.
The high and the low represent the highest and lowest points the graph reached in the set time period.
Candlestick charts are useful as they show the growth, or loss, in a given time period clearly illustrated by the length and color of the candle. In addition, the high and the low provide insight into the volatility that characterized the movement of the graph.
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