Common OHLC Symbol Patterns

With extensive experience as an electrical/software/coding engineer along with having a diverse financial background, Thomas Wettermann’s areas of interest include Machine Learning (ML), artificial intelligence (AI), and Financial Technology (FinTech). For the past few years, Thomas Wettermann has focused on the underlying technologies that support and promote all phases of cryptocurrency, Web 3.0, and metaverse ecosystems.

OHLC charts graphically represent price action over a set period of time for assets such as bonds, stocks, commodities, and cryptocurrencies. When combined with other financial tools, these charts are a great way to predict price movements.

A BTC 1-hour OHLC candlestick chart (Source: opensource.com)

What Does OHLC Stand for?

The abbreviation OHLC stands for four criteria of an asset’s price over a specific period of time: 

• O: open price 

• H: high price 

• L: low price 

• C: close price

Prices are determined over a specific period of time, such as a minute, hour, day, or week. Different symbols can be used to represent the four criteria collectively, and these symbols are often plotted into an OHLC chart.

What Does an OHLC Chart Look Like?

An OHLC chart illustrates a number of sequential OHLC symbols that visually represent the open, the high, the low, and the close of an asset during a period of time. A sample OHLC bar chart is illustrated below.

An OHLC bar chart (Source: datavizcatalogue.com)

This chart includes three OHLC symbols plotted along an x and y graph. The y-axis represents a pricing scale of the asset. Here, the pricing scale extends from $0 to $400.

The chart also includes a time scale provided along the x-axis. The time scale is segmented into equal increments. Here, the time scale is segmented into 24-hour periods, or Days 1, 2, and 3.

This bar chart also includes one OHLC symbol for each of the segmented time periods. For example, the first OHLC symbol in the sequence (denoted in red) represents the four OHLC price points for the asset during the first timing segment of the sequence (Day 1). 

In typical OHLC charts, symbols are provided in black. But they may also be colored to visually represent whether the asset’s price went up or down during a particular time frame. For example, the leftmost OHLC symbol in the chart above is represented in red, which designates a bearish day, where the price of the asset went down.

The second OHLC symbol in the sequence is a green symbol, designating a bullish day, where the price of the asset went up.

What Are Some Common OHLC Symbol Patterns?

Certain commonly occurring OHLC symbols are used to predict potential entry and exit trading positions. A few of the more popular symbols are described below.

Doji

A Doji symbol occurs when the open and close prices are generally equal to one another. The lengths of the Doji’s high and low shadows can vary. If symbols occurring before the appearance of a Doji are bearish or red, the asset may be about to experience a bullish trend.

Doji symbol (Source: DailyFX)

Dragonfly Doji

A Dragonfly Doji is a symbol typically formed when the open and the close prices are at the highest of the day. Note that there is no upper shadow stemming from the high. A Dragonfly Doji will typically represent a bullish trend if it has a long lower shadow. In addition, when the Dragonfly Doji appears at a pricing bottom, the market may be moving in a reverse direction. Hammer White (bullish) and black (bearish) candlestick

(Source: incrediblecharts.com)

The hammer can be either a bullish or bearish candlestick. It consists of a small body near the high, with little or no upper shadow and a long lower shadow. Both illustrated hammers above are considered bullish if they are formed during a bearish trend. Marubozu Bullish and bearish Marubozu signals

(Source: incrediblecharts.com)

Marubozu signals are represented by a long candlestick main body with no upper or lower shadow. These signals can either be bullish or bearish. A bullish Marubozu signal comprises a long main body and is formed when the open equals the low, and similarly where the close equals the high. This signal indicates that buyers controlled the price of the asset from the start of the trading period to the close. It is therefore considered a strong bullish signal. A bearish Marubozu candle comprises a long black (or red) body and appears when the open equals the high for the period and the close equals the low for the period. A bearish Marubozu indicates that sellers controlled the price from the opening to the close.

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Any opinions, news, research, analyses, prices, or other information contained on this website is provided as a general market commentary of Thomas Wettermann and does not constitute investment advice. Thomas Wettermann will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information.

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