What is a shadow?
When referring to Japanese candlesticks, shadows represent price action that occurs outside the open and close prices of a candlestick.
More specifically, the thin lines poking above and below the body display the high/low range and are called shadows.
Every candlestick chart must have an opening, closing, and high and low (OHLC) prices. Once charted, the OHLC prices form a candlestick.
Shadows are the lines above and below the body of a candlestick on a candlestick chart;
- The top of the upper shadow is the “high” and is known as the “wick“.
- The bottom of the lower shadow is the “low” and is known as the “tail“.
Bot the wick and tail are also referred to as “shadows”.
The length of each shadow provides valuable information to traders, revealing buying and selling pressure within a candlestick.