What Is the Real Body?
The real body is the wide part of a candle on a candlestick chart. The real body covers the area between the opening price and the closing price for a period of time. If the open is below the close the candle is often colored green or white. If the close is below the open, for the time period, the candle is usually colored red or black.
Key Takeaways
- A real body is the thick part of a candle, showing the difference between the open and closing price.
- If the candle is black or red, the closing price is below the open. If the candle is green or white, the close price is above the day's open.
- Candlesticks also have shadows; thin lines extending above and below the real body that indicate the high price and low price for the period.
- Each candle represents a period of time, such as one day, one week, or one minute.
What the Real Body Tells You
The real body, in candlestick charting, is the wide part of a candle that represents the range between the opening and the closing prices over a specific time period.
Candlestick charts use a color-coded system to signify direction. When the real body of a candle is black or shaded red, it means the close was lower than the open. If the real body is empty (white) or colored green, it means the close was higher than the open. This color-based system makes it easy for investors to see whether prices moved up or down during a specific time period.
Each candle represents a specific period of time, such as one day. A daily candlestick chart means each candle shows the high and low, via shadows, and the real body shows the open and close prices. The real body is thick, while the shadows are thin.
The origin of candlestick charting goes back centuries. It traces back to Japan, where merchants and rice traders would use a similar system to monitor and track commodity prices. That Japanese system was eventually copied and modified by traders throughout the world, as it has become very popular.
Candlestick Patterns
The real body of a candlestick, along with the shadows, can take on many variations. Some candles have a small real body and long shadows, another candle may have a long real body and no shadows.
Candlesticks with a certain appearance, and in a certain order, create candlestick patterns. Candlestick patterns are used by some traders to signify trend continuations or reversals, or to signal a pause or indecision in the price direction.
Example of a Real Body on a Candlestick Chart
The following is a EUR/USD daily candlestick chart. The candles each represent one day, with the real body showing where the day opened and closed, and shadows showing the high price and low price for the day. A down and up candle is marked with the open and close.
:max_bytes(150000):strip_icc()/eurusdcandlestickchart-d402d085ed8241a089d967af92b8d554.jpg "Real Body: Meaning, Example, Limitations (1)")
The Difference Between a Real Body and an Engulfing Candle
An engulfing candle is a candlestick pattern where the real body of one candle is engulfed by, or fits within, the real body of opposite colors that follow. For example, a green candle could be engulfed by a red candle that follows. The pattern shows a strong shift in short-term sentiment.
Limitations of Candlesticks and Real Bodies
Real bodies show the open and closing price of a security, that is it. Any other information based on the real bodies is subject to interpretation and may be subjective. A series of red candles may be bearish to one trader, but the drop in price may present a buying opportunity to another trader.
Candlesticks are best used in conjunction with other forms of analysis, such as technical price patterns, technical indicators, trend analysis, price action, and possibly fundamentals.
