This method of studying price moments originated in Japan and in recent years greatly gaining in use. Similar to OHLC charts, here are also captured data on highest and lowest rates, only display mode is slightly different.
Despite the fact that in theory does not present us any more information from the bar chart, the biggest advantage of using Japanese candlesticks to highlight the relationship between opening and closing price is, that rates are presented in a very simple visual way.
Individual candlestick consists of a body and two shadows. The body of candlestick represents the vertical distance between the starting and final rate. Shadows are passing from the lowest to the highest price, if those are outside of the area between starting and final rate. The top of the upper shadow shows the highest rate of the selected period, the bottom of the lower shadow is the lowest rate. If the closing price of the selected period is higher than the starting price, the candlestick body is green, in other way it is red.
The color and shape of the Japanese candlestick visually illustrates, if on the market are winning buyers or sellers. A small body of candlestick regardless of the color is a sign of balance on market, between buyers and sellers.