Chartered Market Technician (CMT) Practice Exam

A candlestick chart is distinguished by its ability to display open, high, low, and close prices for a given time period, offering a comprehensive view of price movements in the market. Each candlestick represents a specific time frame (such as one day, one hour, etc.) and provides important insights into the market's performance during that period. The body of the candlestick reflects the difference between the opening and closing prices, while the wicks (or shadows) indicate the highest and lowest prices reached.

While other chart types, such as line charts, might show only closing prices, the candlestick chart's inclusion of open and high prices in addition to close and low prices allows traders to analyze market trends and reversals more effectively. The additional data points can help in identifying price patterns and market sentiment, leading to better-informed trading decisions.

While colors are used to depict bullish or bearish activity in candlestick charts—highlighting the market sentiment—the defining feature remains its ability to present a complete price range within a specified period. Additionally, volume traded can be important for traders but it is not a fundamental aspect of candlestick representations. Thus, the characteristic of showing open, high, low, and close prices is what truly sets the candlestick chart