Upper Shadow
Upper shadow is a term used in technical analysis of financial markets to describe the area above the open and close of a given security. It is also known as the upper wick, or the upper tail. The upper shadow is the area between the open and the high of a given security. The length of the upper shadow indicates the amount of buying pressure in the market. If the upper shadow is long, it indicates that buyers were willing to pay a higher price than the open, but sellers eventually drove the price back down. Conversely, if the upper shadow is short, it indicates that buyers were not willing to pay a higher price than the open.
History of Upper Shadow
The concept of upper shadow has been around since the early days of technical analysis. Charles Dow, the father of technical analysis, used the concept of upper shadow to identify potential reversals in the market. He believed that when the upper shadow was long, it indicated that buyers were willing to pay a higher price than the open, but sellers eventually drove the price back down. This could be an indication of a potential reversal in the market.
Since then, the concept of upper shadow has been used by many technical analysts to identify potential reversals in the market. It is also used to identify potential support and resistance levels. By looking at the length of the upper shadow, traders can get an idea of the amount of buying pressure in the market. If the upper shadow is long, it indicates that buyers were willing to pay a higher price than the open, but sellers eventually drove the price back down.
Comparison Table
| Term | Definition |
|---|---|
| Upper Shadow | The area between the open and the high of a given security. |
| Lower Shadow | The area between the open and the low of a given security. |
| Real Body | The area between the open and the close of a given security. |
Summary
Upper shadow is a term used in technical analysis of financial markets to describe the area above the open and close of a given security. It is also known as the upper wick, or the upper tail. The length of the upper shadow indicates the amount of buying pressure in the market. If the upper shadow is long, it indicates that buyers were willing to pay a higher price than the open, but sellers eventually drove the price back down. For more information about upper shadow, you can visit Investopedia, Investing.com, and other financial websites.
See Also
- Lower Shadow
- Real Body
- Technical Analysis
- Support and Resistance
- Candlestick Chart
- Price Action
- Trend Lines
- Moving Averages
- Relative Strength Index (RSI)
- Bollinger Bands
