Sharemarket candlestick price charts

The humble candlestick chart can tell us a lot about the health, mood and sentiment of the market.

See Candlestick basics — The basics of how to interpret candlesticks (for relative novices).

The sample candlestick chart at right is a simple short-term Daily chart of BHP over a 6-day period in August 2008.

Knowing how to read these simple candles can be so very useful in gauging the mood and sentiment of the market. Candles tell us a whole lot more about the market than the simple line chart can tell us. They can help to identify likely turning points in a stock or in the market index.

See Candlestick basics — The basics of how to interpret candlesticks (for relative novices).

What about bar charts? — See the discussion Candles or bars?

Candle Pattern Spotting — How to find which pattern

Here is a new approach to make it easier for you to find your desired candlestick pattern:

• There are many resources available that describe specific candlestick patterns — provided you already know the name of the candle pattern.

• The biggest challenge for anyone new to candle-spotting is to firstly recognise that one candle shape is meaningful, or that a couple of adjacent candles can be a meaningful candle pattern.

• The graphics here in the Share Market Toolbox will help you quickly spot a pattern, identify the name of the pattern, and then find further details for the selected pattern.

• Because the material here is laid out rather differently to most other candlestick resources, it is reserved exclusively for Toolbox Members .

STEP 1 — Individual candle features

STEP 2 — The Trend?

On your price chart, are you looking at one or more candles that are:

• In an uptrend?

See a list of samples in the Candles in Up Trends section below,

or

STEP 3 — Identify the pattern

From the concise list of relevant candle patterns, select the one that best fits your pattern, and note the key comments such as:

• key pattern characteristics,
• similarities with other patterns and why this is different, and
• psychology behind the pattern.

See the concise list of patterns in UP trends. or