Candlestick

Japanese candlestick charts are a visual tool used to represent price movements over a given period, showing opening, closing, high, and low prices. In trading and economics, they serve as a framework for interpreting market behavior rather than predicting fundamentals.

Each candlestick encapsulates a balance between supply and demand during a specific interval. The body reflects the net price movement, while the wicks illustrate volatility and rejected prices. Traders use these visual cues to assess momentum, uncertainty, and potential turning points in markets.

From a broader economic perspective, candlestick patterns can be viewed as a way to summarize collective market psychology. For example, a long upper wick may indicate that higher prices attracted selling pressure, suggesting resistance rooted in valuation or macroeconomic expectations.

While candlestick charts do not explain why prices move, they help traders structure decisions around entry, exit, and risk management. In practice, they are often combined with fundamental analysis, such as interest rate expectations or supply-demand balances, to create a more complete trading strategy.