2015issue C0110-14
Constructing candlesticks, doji, and hammer from OHLC
A candlestick is assembled from the same four prices as an OHLC bar. The rectangle is the open-to-close span, the wicks mark the low-to-high range, and named shapes such as Candlestick doji and Candlestick hammer follow from that geometry.
- A candlestick is assembled from the same four prices as an OHLC bar: the rectangle is the open-to-close span and the wicks mark the full session range from low to high.
- A Candlestick doji forms when the open and the close are the same, so the bar collapses to a cross after price has already traveled an intrasession range.
- A Candlestick hammer has a short real body at the top of the range, a lower wick longer than that body, and little or no upper wick; body color is not required to identify the shape.
- A two-bar engulfing construction in Candlestick patterns requires the second body to contain the first, as a down bar then an up bar, or the reverse sequence.
Build the body and wicks first
A candlestick is assembled from the same four prices as an OHLC bar. The rectangle is the open-to-close span and the wicks mark the full session range from low to high.
Body color records session direction. The body is white or green when the close is above the open, and black or red when the close is below the open.
When open and close are the same
A Candlestick doji is formed when the open and the close are the same, so the bar collapses to a cross after price has already traveled an intrasession range.
A dragonfly doji has a long lower wick with open, high, and close clustered near the top. A gravestone doji has a long upper wick with open, low, and close clustered near the bottom.
Short body and long lower wick
A Candlestick hammer is a short real body at the top of the range, a lower wick longer than that body, and little or no upper wick. Body color is not required to identify the shape.
The same short-body-plus-long-lower-wick geometry after an advance is labeled a hanging man. An inverted hammer places a long upper wick above a short body with no lower wick.
Two-bar engulfing and the spinning top
Among Candlestick patterns, a two-bar engulfing construction requires the second body to be large enough to contain the first. The bullish version is a down bar then an up bar, and the bearish version is the reverse sequence.
A spinning top is identified by a short body regardless of wick length. At a support or resistance line it is used as confirmation of that level.
All readings on this track · 11 readings
- 1992Constructing signed engulfing and doji detectors
- 1997Candlestick breadth timing on the 1996 S&P 100
- 2002Reading doji and engulfing after extended trends
- 2002A three-lock checklist for doji, gap, and stochastic reversals
- 2002Candlestick reliability after one-day follow-through
- 2004Constructing trendline calls with doji and engulfing
- 2004Doji construction, shadow geometry, and confirmation
- 2011Candlestick signals are not automatic trades
- 2011Breakout side versus catalog labels on finished candle recipes
- 2011Grading candlestick signals by frequency, trend, and breakout
- 2015Constructing candlesticks, doji, and hammer from OHLC