White Candletsick Pattern: Every Trader Should Know

Last Updated: 17 Mar 2023

In the ocean of technical analysis, the candlestick chart pattern is the shark that rules. A technical analyst uses various charts, graphs, and patterns to find a hint of the potential direction of the stock price movement. However, candlestick chart patterns stand out overall.

A candlestick chart pattern informs an analyst or a trader about the open, high, low, and the close price of the security in question. A candlestick or simple candle appears in a way that the observer can answer questions like, did the security close high or low compared to its opening price? This is done using a colour scheme. In that context, this blog details what a white candlestick is.

White Candlestick

A candlestick chart is similar to a bar chart depicting the high, low, closing, and opening prices of a shares. in a trading session. Candlestick charts are often colour-coded with either red and green or black and white. Green is the alternative for a white candlestick whereas red alternates the black candlestick.

A white candlestick means that the closing price of the security was higher than the opening price. A white candlestick suggests a bullish period for the security in review. A bunch of consecutive white candlesticks indicates an uptrend. A white candlestick can be contrasted with a black one that depicts closing prices lower than what it had opened at.

Essentially, a candlestick chart shows the security’s open, high, low, and close for a certain period, i.e., hourly, daily, or weekly. The body represents the difference between the open and closing prices whereas the high and low are shown by the two wicks like shadows on either end of the candles.

A white candlestick represents a positive sentiment of the market regarding the security’s price during a particular period. The body of a candlestick chart represents the opening and closing price of a security, whereas a white candlestick means that the security closed at a higher level than its opening price. It will typically mean that the price action overall is up. It is noteworthy that analysts and traders have the flexibility of choosing the colour scheme they like such as blue or green that denotes the price gains. Charting packages from various vendors offer customized colours.

Candlestick Shading

Technological advancements have led to innovative software that allows users to customize the candlestick colours as per their convenience, but traders mostly prefer using black/white or green/red. A few commonly used colours and their representations are given below-

1. White/Green/Black filled Candlestick: This is formed when the closing price is greater than that of the prior session but lower than the recent-most opening price. It indicates a strong uptrend in security.

2. White/Green/Black hollow candlestick: This is formed when the closing price is greater than both the previous closing and the opening price.

3. Red Filled Candlestick:It is formed when the closing price is below the open price as well as the prior closing price. It represents a strong bearish behaviour of the security.

4. Red Hollow Candlestick:It is formed when the close is greater than the opening price but not the prior closing price.

Difference between candlesticks and bar charts

Both candlesticks and bar charts depict the same price points (open, high, low, and close), but in different ways. One of the major differences between the two most commonly used charts in technical analysis is the absence of “real body” in the bar charts. A bar chart consists of a small horizontal line on the left representing the open price and a small horizontal line on the right representing the closing price.

Technical Analysis and Candlestick Indicators

Candlestick charts are one of the most important elements in technical analysis for a day-trader or analyst. You can extract a lot of information by looking at a candlestick before any other aspects of the chart.

It is safe to say that almost all traders use candlestick patterns with (or without) the help of other indicators to make trade decisions. However, a candlestick chart alone could be risky to trade upon as it may convey half information. A few of the candlestick patterns commonly found on a technical analysis chart are:

1. Ascending Channel: This is formed when the price of a security is moving upwards. As this pattern represents an upward trend, it is predominated by white candlesticks.

2. Descending Channel: Opposite of ascending channel, it is formed when a security is in a downtrend.

3. Bearish Abandoned Baby and Bullish Abandoned Baby: Bearish Abandoned Baby is constituted by three consecutive candlesticks centered with Doji. This type of chart indicates a potential breakout to the downside. Alternatively, the bearish abandoned baby pattern signals a potential reversal to the upside.

Frequently Asked Questions

What do you mean by white candlestick?

Ans: A white candlestick is formed when the closing price is higher than the opening price of the security.

What does a white candlestick indicate?

Ans: A white candlestick indicates a positive market sentiment for the observed security as it is formed when the closing price is higher than the opening price.

What is the difference between red, green, black, and white candlesticks?

A green or white candlestick generally means that the closing price of the security was higher than the opening price whereas a red or black candlestick means that the opening price was higher than the closing price of the security.