Page 113 - THE MARKET WHISPERER

THE MARKET WHISPERER 11 1
16-Day AAPL Japanese Candlestick Chart

Here, too, each candlestick represents one day of trade: [1] a day of
falling prices, [2] a day of rising prices, [3] a day of no change. Take a couple
of minutes and compare this chart with the bar chart. Try to understand
the way prices are presented in this chart, as compared to the bar chart.
I promise you that within a short time, you will understand the concept
without having read any explanation. This is important. Please stop
reading and make that comparison.

Did you continue reading without stopping? If so, you’ve just failed the
most important test for any trader: self-discipline. This time I’ll forgive it,
but let’s agree that this will be the last time you breach discipline. Without
strong discipline, you will pay a costly price.

So how do we read a Japanese candle? As with bars, Japanese
candlesticks indicate the movement of prices over a specific period chosen
by the trader, which can be a minute, a month, and even a year. But instead
of a vertical line with two horizontal bars, the candle has a “‘body.”

• The top and bottom parts of the body show the opening and closing
prices.

• When the candle is a light color, usually green, white or transparent (but
other possibilities exist), the closing price was higher than the opening
price. In other words, the price for the represented period rose.

• When the candle body is red, black or any other dark color, it means