Traditional Japanese Candlestick Charts In The 17th Century

Japanese candlestick patterns, as the name indicates, were invented in Japan. They were developed for use as a form of technical analysis to increase profits in rice trading. This investment tool is known to have been widely used as far back as the 17th century; there are a few references that suggest it may have been in existence in some form before 1600. Legend has it that the creator of this type of chart lived some 500 years ago and used his system to become extremely wealthy.
The first detailed documentation of candlestick patterns can be traced back to an 18th century Japanese businessman from Sakata named Munehisa Homma. He used the system routinely to analyze the trading of rice contracts. Homma made huge contributions to the refinement

This assimilation process has accelerated since 2000 with the prevalence of web based trading.
Candlestick Charts in the 21st Century
Candlestick pattern use has actually evolved rapidly since the advent of the internet. This process of dynamic innovation is driven by widespread information access and the blending of candlestick charts with other forms of analysis. One of the most interesting changes has been the fairly recent addition of colors. These color indicators can help you identify critical points or days on the chart that might indicate a future change in trend. In contrast, traditional Japanese candlestick patterns use only black and white to represent the trading ranges.
In some charts, the white candles (positive days) have now been replaced with candles that are hollow and contain no color. Red is often used for negative days and these candles are usually filled solid. You might also see a hollow red candle (red as just an outline). This indicates a complex situation such as a day when all of the following circumstances applied:
• The opening was lower than the previous day's