Candlestick charts are the most popular way to visualize stock price movements. They were invented in Japan over 200 years ago.
Origin
Munehisa Homma, a Japanese rice trader in the 1700s, developed candlestick charting to track rice prices in Osaka. His methods became the foundation of modern technical analysis.
Reading a Candlestick
- Green/White candle: close > open (price went up)
- Red/Black candle: close < open (price went down)
- Body: distance between open and close
- Wicks/Shadows: high and low of the period
Popular Patterns
- Doji: open equals close (indecision)
- Hammer: small body, long lower wick (potential reversal up)
- Engulfing: large candle engulfs previous (strong reversal signal)
Why It Matters
Nearly every financial chart worldwide now uses candlesticks — a lasting legacy of Japanese financial innovation.