Stocks have been around for many years, and there are many useful methods people have used to make it easier to read and comprehend those graphs. One of these methods are to Japanese candlestick to measure whether the stocks will either rise or plummet, and many people use this popular method.Japanese candlesticks are a way to interpret the rises and drops of the stocks. It originated from Japan and was brought to the west by Steve Nison.
The way you read a candlestick on a chart is to first look at what type of bar they are. There are two types of bars: bullish bars and bearish bars. A bullish bar is usually colored green, and you read it from the bottom to the top. The bottom shows the price that the stock was at during the beginning of the time frame that you are observing, and the top shows the price that the stock was at at the end of the time frame that you are observing. Bullish bars show that the price of a stock increased. A bearish bar is usually colored red, and you read it from top to bottom. The top is the price the stock was at the beginning of the time frame you are viewing from, and the bottom is the price at the end of the time frame you are reading it from.
There are some patterns you can look for when observing the stock graph with Japanese candlesticks. One of these patterns is the bullish three line strike. If you see 3 bearish candlesticks in a row, there is an 83% chance that the next candlestick in the series will be bullish. This allows people to predict when to buy and sell stocks. Another pattern to look out for is the two block gap patter. The bearish two block gapping pattern appears after a notable top in an uptrend, with a gap down that yields two black bars posting even lower lows. This pattern predicts that the stock will drop even lower.
In conclusion, Japanese candlesticks are very useful for stocks. Not only can they be used for observing the stocks differently, but they can also be used to predict when and when not to buy the stock, as there are many patterns to go off of.
Sources: https://www.investopedia.com/articles/active-trading/092315/5-most-powerful-candlestick-patterns.asp, https://www.tradingwithrayner.com/course/1-introduction-to-candlestick-patterns/