What are Candle Wicks?
Wicks of the candlesticks along with the body are the story tellers of the candlestick patterns. They are the graphs which represent the mind of the market traders.
A wick or a shadow or a tail of a candlestick is a line situated above and below the body of the candlesticks. They may be long, short or missing. Longer shadows and short body exhibit the indecisive nature of the mass traders psychology. Where as short shadows and longer body means decisive movement.
Wicks formed because of the change in the market sentiment. As the prices are moving up, with the changed perception of market by the traders, the prices are pushed back towards open or close. Then an upper shadow is formed.
Similarly when the prices are moving down, with the changed market sentiment, the prices are pushed up towards open or close. Then a lower shadow is formed.
There fore longer candle wicks speak of increased change in the sentiment.
Candlesticks with long upper shadows commonly occur when an up trend is loosing the strength and long lower shadows occur when the down trend is loosing its steam.
Long tails with a small body constitutes Spinning tops. They measure the confusion in the minds of the mass traders.
When the body is missing, which happens when both opening and closing are at the same price, a doji line is formed. They may be short legged dojis or long legged dojis with short wicks and long wicks. In a doji if the upper shadow is absent we get Dragonfly doji. If the lower wick is absent we get Gravestone doji. Dojis are a sign of indecisiveness and may mark a beginning of explosive movements.
Candle lines with long lower wick and no or very short upper wick forms Hammer and Hanging man patterns. Where as Shooting Star and inverted hammer are formed, when there is a long upper wick with no or very short lower wick.
A candlestick with no wicks are called Marubozu. When opening & low and closing & high are at the same price, we get Bullish Marubozu and when opening & high and closing & low are at the same price, they are called Bearish Marubozu.
Study the different patterns and understand their significance.
There are many more simple candlestick patterns used in stock analysis. Some of them are listed below. You may click on the name of each pattern listed below to learn and understand more about them.
White Candles are bullish lines in candlestick and candlevolume charts. They signify that the closing price is higher than opening price for that time period.
Black Candles or black candlesticks are bearish lines in candlestick and candlevolume charts. They signify that the closing price is lower than opening price for that time period.
Long lower shadow of a candlestick indicates that the bears are loosing power and bulls are gaining power in that time period.
Long upper shadow of a candlestick indicates that the bulls are loosing power and bears are gaining power in that time period.
A Candlestick Hammer is a reversal candlestick pattern with long lower shadow and no upper wick. They are bullish in nature.
Spinning Top candlestick is a candlestick pattern with small real body. They represent the areas of uncertainty.
Doji candlestick is a candlestick pattern with out a real body. They represent the areas of uncertainty.
Dragonfly Doji candlestick is a candlestick pattern with out a real body and upper shadow. They represent the areas of uncertainty.
Gravestone Doji candlestick is a candlestick pattern with out a real body and lower shadow. They represent the areas of uncertainty.
Marubozu White candlestick is a white candlestick with out shadows. They represent strong bullish trend in the market.
Marubozu Black candlestick is a black candlestick with out shadows. They represent strong bearish trend in the market.
These are hybrid created by combining the features of Equivolume charts and Candlestick charts. The effect of high volume is pictorially emphasized.