To visualize price movements, lines, bars, and candles can be used – the latter are especially popular. There are several main types of candles, with Japanese candles being used most frequently. They are named after their place of origin: they were invented by rice merchant Homma Munehisa in the mid-18th century.

They became popular due to their simplicity of learning combined with clarity – a single glance at a chart composed of them can provide a lot of information about the market condition. Much more than a glance at a line chart – the reason is that one candle conveys the opening and closing prices, as well as the highs and lows reached during the candle's timeframe; in other words, it provides four significant pieces of information at once.

There are two types of candles: 

• Bearish. Usually red in color. They indicate that selling predominates.
• Bullish. Usually green in color. Buying predominates.

Even a single candle can tell a story about the battle between buyers and sellers during its timeframe. For example, if it is green with a large body and small shadow – or no shadow at all – then buyers had a clear advantage; if it is small with a large upper shadow, it means the battle was fierce but managed to push the price slightly upward.

You can read more about analyzing Japanese candles in 👉 this lesson from our free Crypto[START] training course.