while for red candles i know price opens above and closes below. so shadow should only occur below because that's were price is affected when people start buying and if people start selling again within the candle life time, then the lower shadow covers up again. i don't see how upper shadows are being formed in red candles here.
thanks in advanced..
the shadows (wicks) can occur in both directions, because they are based on the
highs and lows, not the
opens and closes of the candle. so, here is an example:
open: 100
high: 150
low: 50
close: 100
this is a doji candle. the market pushed both up and down (above and below the open and close) throughout the candle (creating wicks above and below the body of the candle). this particular market action gives the appearance of a "spinning top" which indicates market indecision. as someone else mentioned, a tug of war is happening when you see these wicks printing.