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What Is a Shadow?
A shadow, or a wick, is a line found on a candle in a candlestick chart that is used to indicate where the price of a stock has fluctuated relative to the opening and closing prices. Essentially, these shadows illustrate the highest and lowest prices at which a security has traded over a specific time period.
The shadow (line part) of the candlestick can be compared with its wide part, which is called the "real body."
- In a candlestick chart, the shadow (wick) is the thin parts representing the day's price action as it differs from its high and low price.
- The length and position of the shadow can help traders gauge market sentiment in a security.
- Some technical analysts believe a tall or long shadow means the stock will turn or reverse while a candlestick with virtually no wick is a sign of conviction.
A candlestick with no shadow is regarded as a strong signal of conviction by either buyers or sellers, depending on whether the direction of the candle is up or down. This type of candlestick is created when a security's price action does not trade outside the range of the opening and closing prices.
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