Hollow Candlestick Chart Type

The Hollow Candlestick Chart is a variation of the traditional candlestick chart, offering a more nuanced way to interpret market sentiment. It is primarily used by traders to differentiate between days with upward momentum versus downward momentum, making it easier to spot trends and reversals.

How to Access the Hollow Candlestick Chart:

1. On the top bar of the platform, click on the Chart Type option.
2. From the dropdown menu, select Hollow Candlestick Chart.

Features of Hollow Candlestick Charts:

1. Color and Fill Representation:

   • Hollow candles help visualize the direction of the market more intuitively:
     • Hollow candles: Represent periods where the closing price is higher than the opening price (bullish movement).
     • Filled candles: Represent periods where the closing price is lower than the opening price (bearish movement).
   • Both types of candles can be either green (bullish) or red (bearish) depending on the overall price movement compared to the previous period. This visualization echoes the notion from the legendary investor Jesse Livermore, “The trend is your friend until the end,” making hollow candlesticks perfect for spotting sustained trends.

2. Body and Wick Structure:

   • Like regular candlesticks, each hollow candlestick shows:
     • Body: The range between the opening and closing prices.
     • Wicks (or shadows): Represent the high and low prices for the time period.

3. Differentiation of Market Trends:

   • The hollow and filled nature of these candles allows traders to quickly distinguish between sessions that ended higher or lower, relative to their opening price. This clarity can be particularly helpful when analyzing volatile markets, helping you understand if momentum is shifting or continuing.

4. Customization Options:

   • Traders can personalize the appearance of the hollow candles by adjusting their color schemes, line thickness, and other visual preferences.

5. Patterns and Reversals:

   • Hollow candles make it easier to spot potential reversals and continuation patterns, allowing traders to act faster based on emerging trends.

6. Momentum and Sentiment:

   • Hollow candlesticks provide a unique view into market sentiment—whether buyers or sellers are in control over specific time frames. As Bruce Kovner, one of the greatest traders, once said, “You have to be willing to look at the reality of the market.”

Use Cases:

• Trend-Following Traders: Hollow candlesticks are ideal for traders looking to follow strong trends while filtering out noise from small price fluctuations.
• Reversal Pattern Recognition: Their visual cues help in identifying key market reversals more easily.
• Market Sentiment Analysis: By observing filled versus hollow candles, traders can gauge bullish or bearish momentum more effectively.

The Hollow Candlestick Chart is a powerful tool for traders who want to enhance their ability to read price action, trends, and momentum, giving them a clearer picture of market sentiment.