[Star R] Basic Composition of K-lines
Opening Price: The first transaction price of the trading day.
Closing Price: The last transaction price of the trading day.
Highest Price: The highest transaction price during the trading day.
Lowest Price: The lowest transaction price during the trading day.
K-lines usually consist of three parts:
Upper Shadow: Located above the K-line, indicating the price range between the highest price and the closing price (or opening price, depending on the nature of the K-line).
Body: Indicates the price range between the opening price and the closing price. A bullish line (red or white) indicates the closing price is higher than the opening price, while a bearish line (green or black) indicates the closing price is lower than the opening price.
Lower Shadow: Located below the K-line, indicating the price range between the lowest price and the opening price (or closing price, depending on the nature of the K-line).
[Star R] K-line Interpretation Methods
Interpretation of Single K-line
Bullish and Bearish Lines: A bullish line indicates a market rise during that period, while a bearish line indicates a decline.
Body Size: The longer the body, the stronger the market's attack. The longer the bullish line body, the more sufficient the upward momentum; the longer the bearish line body, the greater the downward momentum.
Shadow Length: The longer the shadow, the stronger the resistance or support in that direction. The longer the upper shadow, the greater the resistance faced during the rise; the longer the lower shadow, the stronger the support.
Interpretation of K-line Combinations
Double Bottom and Double Top: A double bottom (W-bottom) is a signal for the market to turn from a decline to an upward trend; a double top (M-top) signals a turn from an upward trend to a decline.
Head and Shoulders Bottom and Top: A head and shoulders bottom is a pattern indicating a market reversal upward, while a head and shoulders top indicates a market reversal downward.
Engulfing Line: An engulfing line usually indicates that the market may soon reverse.
Doji: A doji indicates that the opening and closing prices are the same during that period, showing a balance of power between bulls and bears. It may signal a peak if occurring at high levels, and a bottom if occurring at low levels.
Three White Soldiers and Three Black Crows: Three white soldiers are three consecutive bullish lines, indicating a strong market rise; three black crows are three consecutive bearish lines, indicating a weak market decline. However, note that three black crows during an upward trend may represent bulls accumulating energy.
Combining Position and Volume
Position: The position of the K-line is crucial for determining its nature. For example, a long upper shadow appearing in the early stages of a rise may indicate the main force testing the market, while a long upper shadow appearing at the end of a rise may signal a peak.
Volume: Trading volume is an important indicator for judging market trends. In K-line charts, trading volume is usually analyzed in conjunction with the size or color of the K-line body. For example, a bullish line with increased volume usually indicates sufficient upward momentum; conversely, a bearish line with increased volume may indicate strong downward momentum.
