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CONSTRUCTION OF A JAPANESE CANDLESTICK. It is important to gain a good understanding about how a single Japanese candlestick is constructed. Each Candlestick displays a visual representation that informs you how price is behaving during a selected time period. As such, if you can interpret them with confidence then you can deduce many features of the current performance of market price. Each candlestick comprises four main components. They are its high price, closing price, low price and opening price. The range between the closing and opening prices is termed the ‘Real Body’ of a candlestick. When the color of the ‘Real Body’ is white, then this represents trading situations whereby price closed higher than its opening value. This is considered a bullish result. The following diagram depicts a bullish Candlestick. Bull Candle In addition, the distance between the closing price and the high price is called the ‘wick’, whilst the distance b

THE HISTORY OF JAPANESE CANDLESTICKS. The fundamental theory and concepts behind Japanese Candlesticks were invented over three hundred years ago by a Japanese rice trader named Sokyu Honma (1716 -1803). Sokyu lived in Sakata, Japan and was also known as Sokyu Homma and Munehisa Homma. He made extensive studies of the price movements of stocks and commodities, especially rice, which enabled him to identify traits and patterns from daily trading formations. He was then able to produce a very viable trading strategy that made him a very wealthy man. In fact, he eventually developed a very fearsome reputation for diligent and accurate trading which he gained from exploiting his enhanced knowledge of the rice markets and candlestick strategies. Such was his success that Sokyu Honma achieved the rank of honorary Samurai as well as attaining the government rank of financial advisor. He compiled a book in 1755 called the ‘Fountain of Gold – the Three Monk