WEBVTT 00:03.560 --> 00:10.050 In this video we'll take a look at how to read and analyze a candlestick if you're going to use Candlestick 00:10.050 --> 00:12.300 charts to profit. 00:12.300 --> 00:14.670 Obviously you need to know how to read candlesticks. 00:14.670 --> 00:20.520 Now most of you would be familiar with a chart like this simple line chart and it just simply plants 00:20.520 --> 00:23.330 a dot at the closing price. 00:23.340 --> 00:29.070 In this case every four hours and then connects them for a line you can see price has been falling but 00:29.070 --> 00:36.090 with candlesticks you can see much more information because it shows you specifically every four hours 00:36.090 --> 00:37.120 what had happened. 00:37.120 --> 00:42.230 It shows you the sentiment of the market the momentum of the market the things that truly move the market 00:43.560 --> 00:51.700 candlesticks hearken back to the Japanese rice futures markets a couple centuries ago. 00:52.050 --> 00:55.260 Three or four hundred on the top of my head so it's been around for a while. 00:55.260 --> 01:02.280 It's just recent that the West has picked up on it though they do come in a multitude of colors but 01:02.280 --> 01:06.110 typically you're going to see red and green being red being negative. 01:06.120 --> 01:14.570 Green being positive or black and white black being negative white being positive so you can see each 01:14.570 --> 01:22.250 one of these candlesticks has little bits and pieces that make up the candlestick itself. 01:22.310 --> 01:26.220 So I'll go ahead and give you an idea as to what we're looking at here. 01:26.270 --> 01:28.640 You have what is known as the body. 01:28.780 --> 01:32.720 This is the colored part and then you have Wicks. 01:32.720 --> 01:41.940 Hence the name candlestick because it looks like a candlestick with the wicks sticking out so how do 01:41.940 --> 01:42.690 you read this. 01:42.690 --> 01:46.470 Well the first thing that you need to know is the color matters. 01:46.500 --> 01:50.500 There is a color to it green or red. 01:50.610 --> 01:57.730 Then it tells you that the mark and either rose or fell during that timeframe. 01:57.760 --> 02:05.560 So if this is a four hour candle and this Bonnie is green that means it went higher during that four 02:05.560 --> 02:06.850 hours. 02:06.850 --> 02:13.690 The one difference might be sometimes on churning platform you'll see like a black candlestick if it's 02:13.690 --> 02:16.030 a completely unchanged candle. 02:16.030 --> 02:22.060 For example but at this point let's assume that the body is green. 02:22.190 --> 02:26.740 So the highs and lows are the wicks. 02:26.880 --> 02:31.200 So you can see that the low is here and the high was there. 02:31.200 --> 02:40.820 And again we know this because this Bonnie is going to be green and I'll go ahead and color that in 02:40.910 --> 02:43.730 with my screenwriting tool here. 02:43.760 --> 02:45.460 So that's a green Bonnie. 02:45.470 --> 02:47.630 That's a positive candle. 02:47.630 --> 02:56.670 So what is the body itself mean well besides the fact that we have gone higher the Bonnie shows the 02:56.670 --> 02:58.350 opening and closing price. 02:58.350 --> 03:07.740 Well if it went higher then obviously the bottom of the body was where we opened and the top is where 03:07.740 --> 03:09.060 we close. 03:09.090 --> 03:10.520 So think of it this way. 03:10.830 --> 03:12.360 We opened here. 03:12.480 --> 03:14.040 We fell a bit. 03:14.070 --> 03:16.950 We rallied all the way up here and then close up here. 03:16.950 --> 03:18.510 We closed higher. 03:18.540 --> 03:21.140 Then we started. 03:21.160 --> 03:29.940 Now let's go ahead and draw out another candlestick and this time I will make it a negative candlestick. 03:29.940 --> 03:32.240 So this is going to be red. 03:32.250 --> 03:33.600 The body is red. 03:33.630 --> 03:38.480 We have opened up higher than we closed. 03:38.730 --> 03:40.270 So at this point. 03:40.770 --> 03:41.080 Go ahead. 03:41.080 --> 03:42.120 Put some wicks on 03:47.160 --> 03:55.470 and you can see that that's the low that's the high that's the entry and that's the exit the exits lower. 03:55.530 --> 04:03.060 So this gives you an idea as to what's going on during that four hours and the other thing that I would 04:03.060 --> 04:08.490 point out is the size of the body matters and why does that matter. 04:08.530 --> 04:15.130 Because it shows the distance from open to close it shows true conviction or lack of. 04:15.130 --> 04:22.990 So for example I see a candlestick here that may not look overly exciting but it but in hindsight it 04:22.990 --> 04:24.400 truly was. 04:24.400 --> 04:29.950 And the reason was because the body was the entirety of the candle. 04:29.950 --> 04:31.110 So think about that. 04:31.150 --> 04:36.040 That means during this four hours we jumped in here and just went straight up. 04:36.130 --> 04:41.470 It wasn't the biggest candle that we've ever printed in the rural market but it certainly was positive. 04:41.470 --> 04:44.710 So was this one you can see that the high was just above. 04:44.740 --> 04:48.150 There is no way here we never dropped below that. 04:48.190 --> 04:51.970 So the size of the body truly matters and it works both ways. 04:51.970 --> 04:55.020 That's a very negative candle. 04:55.090 --> 05:03.430 It's not a 100 percent thing but typically if you follow just the impulsive candles that will get you 05:03.430 --> 05:04.930 on the right side of the market. 05:04.960 --> 05:08.990 But of course you can see that we do pullback. 05:08.990 --> 05:14.060 I mean think of it this way it had you bought ripple there and you saw this very negative candle with 05:14.060 --> 05:15.820 a very long red body. 05:15.880 --> 05:18.020 You know to perhaps be cautious. 05:18.810 --> 05:26.330 And that's the sentiment mind set of the candle each candle tells a story or tells a chapter in the 05:26.330 --> 05:28.580 overall story that is the market. 05:28.580 --> 05:31.240 And that's what we're going to look at in this course. 05:31.250 --> 05:35.390 So now that you understand the makeup of the candlestick we can move further.