Page 114 - THE MARKET WHISPERER

112 PART 4 - The Char t: Money ’s Footprint

the closing price was lower than the opening price. In other words, the
price dropped.
Most of the candles have a tail, sometimes also called a shadow.
• At the upper end, it is called the topping tail, and indicates the highest
price for the period represented by the candle (for example, the day’s
high).
• A tail at the lower end is called the bottoming tail, and indicates the
lowest price for the specific period.
Later we will learn that the length of the tail is very important for
analyzing the expected stock price movement.

Japanese Candle Showing Price Rise:

Let’s assume this is the candle representing one day of trading. On the
left you see a simple line chart describing the stock’s behavior over one
day. The stock opens trade at a price of $20, drops to a low of $19.5, rises
to a day high of $21.2, and ends the day of trading with a close of $21.

To the right of the chart we see a clear candle: that means the price
rose. The opening price is the base of the body of the candle, the close is
the upper peak of the candle body, and the bottoming and topping tails
indicate the day’s high and low. Simple, right?

Japanese Candle Showing Price Drop: