Candlestick charting, also known as Japanese candlestick charting, is used by stock, commodity, and currency traders as an effective method of analyzing price data and predicting future market movements. Candlestick charting originated in Japan several centuries ago, and has since spread to many other countries to become one of the most widely used and widely recognized chart types.

A white candlestick is composed of a real body and two thin lines, the top shadow and the bottom shadow. The real body is the area between the open and the close price. The thin lines indicate the high and low prices of the security during the period. To form a white candlestick, the open and close prices must exceed the previous period's open and close prices.

White candlesticks offer three important pieces of information; they depict the high and low prices of the period, the opening and closing prices, and the direction of the trading session. When the closing price is higher than the opening price, a white candlestick is formed. This indicates that the buying pressure for the security was greater than the selling pressure and that the security’s value increased over the period. Conversely, if the close is lower than the open, a black candlestick is formed and this indicates that selling pressure exceeded buying pressure.

Where several recurring white candlesticks form in a row, this can be used to indicate that an uptrend is present and that the value of the security is increasing. Traders may use this information to enter or exit positions, or adjust stop/loss orders.

Given the insights that white candlesticks provide to traders, it is easy to see why they are so widely used. As Warren Buffet himself said, “The key to successful investing is to begin with a sound understanding of the basics, and then to stay focused and disciplined when faced with a wide range of choices.” Knowledge of the white candlestick and its meaning is a fundamental cornerstone of building knowledge.