Bearish Candle
A bearish candle is a type of candlestick chart pattern used in technical analysis to indicate a potential downward trend in a security’s price. The pattern is formed when the opening price of a security is higher than its closing price, creating a candle with a long upper wick and a short lower wick. This indicates that the security opened at a high price, but buyers were unable to sustain the price and the security closed lower than it opened. The bearish candle is the opposite of a bullish candle, which indicates a potential upward trend.
History of the Term
The term “bearish candle” was first used in the late 19th century by Japanese rice traders. The traders used candlestick charts to track the price of rice and other commodities. The bearish candle was one of the first chart patterns to be identified and used by traders. Over time, the pattern was adopted by traders in other markets, including stocks, bonds, and currencies.
Comparison Table
| Pattern | Opening Price | Closing Price |
|---|---|---|
| Bullish Candle | Lower | Higher |
| Bearish Candle | Higher | Lower |
Summary
A bearish candle is a type of candlestick chart pattern used in technical analysis to indicate a potential downward trend in a security’s price. The pattern is formed when the opening price of a security is higher than its closing price, creating a candle with a long upper wick and a short lower wick. This indicates that the security opened at a high price, but buyers were unable to sustain the price and the security closed lower than it opened. For more information about this term, you can visit Investopedia, Investing.com, and other financial websites.
See Also
- Bullish Candle
- Candlestick Chart
- Technical Analysis
- Price Action
- Support and Resistance
- Trend Lines
- Moving Averages
- Relative Strength Index (RSI)
- Bollinger Bands
- MACD
