About 200 hundred years ago the Japanese developed there own form of technical analysis called Japanese candlesticks, to determine the price changes in the rice market.

This kind of chart has great ability to show the relationship between the supply and demand of an underlying security.

This makes Japanese candlesticks a convenient tool to use as a primary analysis tool. The reason is because Japanese candlesticks give us information about the open, close, high and low is one visual element.

Japanese Candlesticks are a tool by themselves, but we can easily integrate them into other technical analysis tools for further confirmation of securities movement.

The Japanese Candle is made up of two parts, the body and the shadow, or tails.

The body tell us about open and close prices, while the shadow or tail tells us about high and low prices.

The upside of the candle represents the close price, while the down side of the candle represents the open price.

When the close price is lower then the open price, we have a “black” time frame.

The down of the candle is the closing price and the up side of the candle is the opening price.