Candlestick charts are a technical tool that packs data for multiple time frames into single price bars. This makes them more useful than traditional open-high, low-close bars (OHLC) or simple lines that connect the dots of closing prices. Candlesticks build patterns that predict price direction once completed. Proper colour coding adds depth to this ccolourfultechnical tool, which dates back to 18th century Japanese rice traders.
Steve Nison brought candlestick patterns to the Western world in his popular 1991 book, “Japanese Candlestick Charting Techniques.” Many traders can now identify dozens of these formations such as Doji, Bearish Engulfing, Harami, dark cloud cover etc.