How to Read a Candlestick

The candlestick is the building block of modern chart reading. Master one candle and you can read thousands. Each represents a fixed slice of time and, once you know the parts, tells you at a glance how the battle between buyers and sellers played out.

Open, high, low and close

Every candle records four prices for its period: where price opened, the highest and lowest points reached, and where it closed. Those four numbers are all a candle is; everything else is how they are drawn.

The body

The thick part of the candle, the body, spans the open and the close. A long body means price moved decisively in one direction; a short body means the open and close were close together, signalling indecision or a quiet period.

The wicks

The thin lines above and below the body are the wicks (or shadows). They mark the highest and lowest prices reached during the period. Long wicks show that price was pushed to an extreme and then rejected, which often hints at a shift in momentum.

Bullish vs bearish

A candle that closes higher than it opened is bullish, usually drawn green or hollow. One that closes lower is bearish, usually red or filled. The colour lets you scan a chart and instantly see who won each period.

Reading the story

Put it together and a candle tells a story: a long green body with small wicks says buyers dominated; a small body with a long lower wick says sellers pushed down but buyers fought back. Reading that story, candle by candle, is the heart of chart analysis.