Long Bullish Candles: Body Size Is Different from the Daily Return
Compare a long bullish candle with nearby candles and calculate its body, full range, and change from the previous close separately. Learn how its location and related announcements shape the questions to ask next.
A long bullish candle closes above its open and has a body longer than those used for comparison. There is no universal absolute threshold for long, so compare it with the stock's recent movements. It may show a strong intraday recovery, but it does not automatically mean a gain from the previous close or a rise the next day.
Record body size in both won and percentage terms
A 1,000-won body has a different significance for a 5,000-won stock than for a 100,000-won stock. Comparing body length as a percentage of the open alongside the recent distribution of body sizes on the same timeframe makes the comparison clearer. A large high-minus-low range does not constitute a long body if the open and close are close together. Check the numbers, since chart zoom can also make a candle look long. Rankings can change with the comparison period, so specify the scope—for example, that the body is among the larger ones over a stated number of recent candles.
Change the questions according to where the candle appears
For a bullish candle that moves beyond a long-established range, check whether the close stayed above the upper boundary. For one immediately after a sharp decline, examine how much of that decline was recovered. If a long bullish candle appears after an already substantial rise, review the trading range and assumed entry price rather than focusing only on further upside. Do not assign the same cause to the same shape every time. If there was an earnings release or contract announcement, check its actual content and timing. If the cause cannot be verified, record only the price change as an observed fact.
Volume and wicks add separate information
Even with heavy volume, a close far below the high means the session did not finish at its highest price. Conversely, a short upper wick does not mean that price will hold on the next trade. Record what a long body, short wick, and heavy volume each measure separately. Counting several such features does not increase the number of independent pieces of evidence by the same amount. When assessing a hypothetical purchase, use the price at which the signal could actually have been known, rather than the candle's opening price, to avoid inflating returns in hindsight.
Worked example
Hypothetical example: If the previous close was 11,000 won and today's open, high, low, and close are 9,500 won, 10,700 won, 9,400 won, and 10,500 won, the body is 1,000 won and the rise from the open is approximately 10.53%. Relative to the previous close, however, the change is approximately −4.55%. The body accounts for approximately 76.92% of the full 1,300-won range. A large bullish candle and a loss from the previous close can both be observed at the same time. State which reference point defines the rise.
What to check
- Compare body length with the stock's historical candle bodies.
- Calculate the change from the open separately from the change from the previous close.
- Record whether the candle marks a range breakout or a recovery after a sharp decline.
- Do not assume a trade at the candle's open before the signal was confirmed.
Sources and primary materials
This is educational material about research methods. For an actual company decision, verify the filings and primary sources for the relevant period.