How does Candlestick charting work?

• There are seven key elements in a candlestick: open, high, close, low, upper shadow or wick, lower shadow or wick and the real body or spread.
• A filled red bar shows that the asset closed at a price lower than the open. It indicates that bears have been in control. The opposite holds for a hollow, usually green, bar.
• The real body or the spread reveals the sentiment for the session.
• Wide spread: indicates strong, bullish or bearish, market sentiment.
• Narrow spread: indicates weak, bullish or bearish, market sentiment.
• The wick’s length and context give strong indications of price action during the session. If the wick is too short, it shows continued strong sentiment in the direction of the trend. As such, it gives very strong indications when combined with volume.
• A long lower wick indicates that sellers have been able to push the market lower before it closes higher.
• A long upper wick indicates that buyers have been able to take the market higher before it closes lower.
• Be on the lookout for price reversals. For example, when bulls take the market high but the market closes at a much lower price by the end of the day, this indicates a bearish sentiment.
• It is also useful to check the price behaviour in a shorter time frame showing brief rallies, pauses and declines.
• This technique can be combined with VAP (Volume At Price) as opposed to VPA (Volume Price Analysis). Volume shows how strong or weak this price action is.