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From:http://www.candlecharts.com/about-press-article5.html

For more than two centuries Japanese analysts have used a system of predicting market movements by diagrams called candlestick charts. Until the beginning of the 1990s, these charts were rarely, if ever, used by western analysts, yet they are predicated on the same principles as orthodox analysis — graphic shapes that help visualize the direction of a market.

Candlestick charts contrast two features in the market at any trading interval — the trading range during the day and the market's opening and closing level.

The trading range is expressed by a thin line going from the bottom to the top. A thick line, shaped like a candle, represents the open and close of the market. If the market goes up during the day, the candle is white, if it goes down the candle is red. (In modern usage this is black.)

Candlesticks charts, like much technical analysis, put great emphasis on the psychological relationship between the movements of markets and their openings and closings. The opening and closing moments are key points in the life of the market and indicate the direction — and trading mentality — for the day and the market.

The opening, for example, provides the first clue as to the direction of the market that day. All the overnight information and speculation has come to a head. The more anxious a trader feels, the earlier they want to trade. Shorts may be looking for cover, longs looking to buy. And hedgers may need to take a new position.

A similar barrage of sentiments will be found at the close of the day — the time most futures traders decide on market direction.

As a very simple example, the shooting star illustrates the depth of market feeling. Here the trading range — as expressed by the thin line — goes up. However, the solid block of the candle is small and red (the market close is only slightly lower than its start). This reveals that the market tested new levels during the day but could not support them.

The immediate comparison would be one of using resistance levels — floors and ceilings. There is a close similarity between candlestick patterns and western terms: the three Buddha top, for example, corresponds to a head and shoulders formation.