In the 18th century, Japanese rice traders used candlestick charts for the first time. They are easier to read and more visually appealing than the previous chart types. The opening and highest price points of a currency are displayed in the upper portion of a candle, while the closing price and lowest price point are displayed in the lower portion of a candle. A green or white candle indicates a period of rising prices, whereas a red or black candle indicates a period of falling prices.
Candlestick chart patterns and shapes are used to forecast market direction and movement. The hanging man and the shooting star are two of the most popular shapes on candlestick charts.