What is White Candlestick?

Key Highlights

• A white candlestick reflects a period where the security's price has closed higher than its opening.
• A candlestick displays the security's open, high, low, and close for a specified time frame.
• Candlestick charts are advantageous for technical traders as they provide a clear visualisation of a full day's price movement.
• The candlestick's colour, whether white, green, blue, or black, may vary depending on the chosen program.

White Candlesticks Meaning

White candlesticks denote a positive surge in a security's price over the observed period. On a candlestick series chart, the body is usually presented in white to indicate an overall upward price movement. Some technical charting systems allow traders to customise colours, opting for shades like blue or green to represent gains. Typically, a candlestick showcases the security's open, high, low, and close for a specified timeframe (e.g., weekly, daily, hourly).

The high and low points are represented by the two wicks at each end of the body, with the body encapsulating the difference between the open and closing prices. Hence, candlestick markings provide a snapshot of the price range reported by the security during a single period. Technical traders favour candlestick charts for their ability to illustrate a full day's price movement clearly. Default colour schemes often include white/green (UP) and red/black (DOWN). However, modern charting packages offer customisation options for traders to tailor colour schemes according to their preferences.

Red/black candlesticks represent a downward movement, where the closing price is lower than the opening. Conversely, white/green/black filled candlesticks occur when the close is higher than the prior close but lower than the open. White/green/black hollow candlesticks occur when the close is higher than both the prior close and the open. Understanding these colour-coded patterns is crucial for interpreting market behaviour based on candlestick charts.

Candlestick Shading

Charting software typically offers the flexibility to customise candlestick colours, although the prevalent choices include white, black, green-filled or hollow, and red-filled or hollow. Each colour signifies a distinct scenario.

• White/Green/Black Filled Candlesticks: These occur when the closing price is higher than the prior close but lower than the open.
• White/Green/Black Hollow Candlesticks: These occur when the closing price is higher than both the prior close and the open.
• Red Filled Candlesticks: These occur when the closing price is beneath the open and the prior close.
• Red Hollow Candlesticks: These occur when the closing price is higher than the open but lower than the prior close.

Candlestick Patterns in Technical Analysis

Here are some candlestick patterns commonly observed in a technical analysis chart:

1. Ascending Channel This pattern emerges as a security's price experiences an upward trend. A prevalence of white candlesticks typically characterises the ascending channel.

2. Descending Channel A descending channel takes shape when a security's price undergoes a gradual decline over time. In this scenario, red candlesticks are predominantly present.

3. Bearish Abandoned Baby The bearish abandoned baby pattern consists of three consecutive candlesticks centred around a doji. This pattern suggests a potential downside breakout. It occurs when a white candlestick is succeeded by a doji above the prior day's close, followed by a red candlestick with an open below the previous day's close.

4. Bullish Abandoned Baby Conversely, the bullish abandoned baby pattern indicates a potential reversal to the upside. This pattern commences with a red candlestick, followed by a doji below the prior day's close, and concludes with a white candlestick having an open above the previous day's doji open/close.

Conclusion

The white candlestick holds significance as a key element in technical analysis, providing valuable insights into a security's price movements. As a visual representation of a bullish period, the white candlestick denotes instances where the closing price surpasses the opening, suggesting positive market sentiment. This pattern, commonly found in candlestick charts alongside its counterpart, the black or red candlestick, serves as a crucial indicator for traders and analysts alike.