White Candlestick - Explained
What is a White Candlestick?
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Table of ContentsWhat is a White Candlestick?How Does a White Candlestick Work?Technical Analysis Indicators
What is a White Candlestick?
A white candlestick refers to a point displayed on a candlestick chart that exhibits a day when there is a rise in the underlying price.
How Does a White Candlestick Work?
White candlesticks inform about an increase in the price of a security in one day. In a candlestick chart, the white-colored portion of the candlestick will illustrate the positive increase in the stock price. There can be some technical charting models where the traders can select a distinct color (sometimes green) for stating the rise in price. Every end of the candlestick will consist of two wicks representing the price highs and lows encountered in a day. Therefore, the candlestick gives information about the price range that the stock has experienced in a single day. Technical traders find candlestick chart a convenient tool for representing the price movement in an entire day. Usually, these charts will be seen in color patterns of white/green, red/black, or a doji. Red/black candlesticks work in contrast to the white candlesticks. As white candlesticks represent a positive increase in underlying prices for a day, red/black candlesticks represent a declining movement of prices for the day. A doji, being another day pattern, is represented by a dash. Here, the opening price of the stock is equivalent to the closing price.
Technical Analysis Indicators
The indicators of technical analysis are a result of amalgam of white, red and doji candlesticks. While investing in a security, the short-term and long-term formations can be considered as indicators. The trading patterns that can be seen on a technical analysis chart are:
- Ascending channel: An ascending channel takes place when the price of security increases. Considering the rise, this channel covers white candlesticks.
- Descending channel: A descending channel is formulated when there is a decrease in the security price. This channel is associated with red candlesticks.
- Bearish abandoned baby: A bearish abandoned baby pattern consists of three back-to-back candlesticks with a doji being centrally located. It indicates a breakout to the lower side. This specific pattern takes place when a doji follows a white candlestick over the closing price of the last day, and then, a red candlestick that opens below the closing price of the previous day.
- Bullish abandoned baby: A bullish abandoned baby pattern is based on totally contrasting grounds with a bearish abandoned baby. This pattern starts with a doji that follows a red candlestick beneath the close price of the previous day, and then a white candlestick that opens above the doji open or close of the previous day.