White Candlestick

What Is a White Candlestick?

A white candlestick depicts a period where the security's price has closed at a higher level than where it had opened. It is a point on a security's candlestick chart representing a bullish period.

On some charts, an up-candlestick may be depicted as either green or black. These may be contrasted with a red candlestick, which denotes a lower closing price than the prior period.

Understanding White Candlesticks

White candlesticks represent a positive increase in a security’s price during the observed period of time. The body of the candlestick will typically be displayed in white on a candlestick series chart to show that the net result of the period's price action was up. However, in some technical charting systems, the trader may have the option to choose a specified color, such as blue or green, to represent price gains.

Typically, a candlestick will show the security's open, high, low, and close for a specified time period (e.g., weekly, daily, hourly, etc.). The high and low will be shown by the two wicks on each end of the body. The body comprises the distance between the period's open and closing prices. Thus, candlestick marks show the range of prices that the security has reported through a single period.

Image by Julie Bang © Investopedia 2019

Candlestick charts are convenient for technical traders because they can easily display a full day's price movement. Generally, the default colors for candlestick charts will be either white/green (UP) and red/black (DOWN), though, nowadays, charting packages offer the trader the option to customize the color schemes to their specifications.

Red/black candlesticks are the opposite of white candlesticks. They represent a downward movement for the day. In a red/black candlestick, the closing price of a security is reported as lower than the opening price.

The last possibility for charting a period's price action is where the open and close prices are identical. This is called a doji and is graphically portrayed by a dash, signifying that the charted security’s opening price is equal to its closing price.

Candlestick Shading

Most charting software allows you to change the colors of candlesticks, but the most commonly used colors are white/black/green-filled or hollow and red-filled or hollow. Each color conveys a different meaning:

The two most common types of candlesticks are white/green/black hollow candlesticks, which are indicative of a strong uptrend; and red-filled candlesticks, which are indicative of a strong downtrend. Red hollow and black-filled candlesticks are less common since they require a price gap to occur.

Candlesticks vs. Bar Charts

Candlestick and bar charts show the same information — open, high, low, and close — but in a different way. A bar is a vertical line, with no real body like a candlestick, consisting of a small horizontal line to the left marking the open price and a small horizontal line on the right marking the close.

Technical Analysis & Candlestick Indicators

Technical analysis indicators are formed from the combination of white, red, and doji candlesticks. There are many short-term and long-term formations that can be used as indicators for security investment. Technical analysts can quickly glean a lot of information from the color of a candlestick before looking at any aspects of the chart. For example, a white, green, or black-filled candlestick might suggest that the price is becoming top-heavy, while a red-filled candlestick represents a clear and strong downtrend. Traders may use these insights to gauge market sentiment.

Most traders use candlestick charts in conjunction with other forms of technical analysis. For example, they may gauge market sentiment using candlestick charts and then use chart patterns to identify potential areas of breakdowns or breakouts. Technical indicators can also be useful as a confirmation of market sentiment. For example, the relative strength index (RSI) may be used in conjunction with candlestick charts to show how strong a trend is in a given direction.

Below are a few candlestick patterns commonly identified on a technical analysis chart.