How Do You Read a Candlestick Chart?
Each candlestick represents price action over a time period — typically one minute, one day, or one week — showing four values: open, high, low, and close (OHLC). The body is the range between open and close; wicks (or shadows) extend to the high and low. A filled or red body means the close was below the open; a hollow or green body means the close was above.
Anatomy of a Candlestick
Every candlestick encodes four data points from a single time period. The open is the first traded price in the period. The close is the last. The high is the highest price reached. The low is the lowest. The rectangular body connects the open and close, so its height reflects how much the price moved between the start and end of the period. The thin lines extending above and below the body — called wicks, shadows, or tails — show the full range that price traveled beyond the open and close.
Color convention tells you direction at a glance. Green (or white, on traditional charts) means the price closed higher than it opened — a bullish candle. Red (or black) means the price closed lower than it opened — a bearish candle. A long body relative to the wicks shows that one side — buyers or sellers — dominated the session. A short body with long wicks indicates that price moved significantly in both directions before settling near where it started, suggesting indecision or a battle between buyers and sellers.
The time frame of each candle is set by the chart you are reading. On a daily chart, each candle represents one trading session. On a 15-minute chart, each candle covers 15 minutes of trading. The same candlestick patterns can appear on any time frame, though their reliability varies — patterns on longer time frames (daily, weekly) are generally considered more significant than the same pattern on a one-minute chart, where noise dominates.
Key Points
- The body of a candlestick spans the open-to-close range; the wicks span the full high-to-low range for the period.
- A green or hollow body means the close was above the open (bullish); a red or filled body means the close was below the open (bearish).
- Long wicks relative to the body signal that price was rejected at those extreme levels — a clue about where buyers or sellers stepped in.
- Multi-candle patterns (engulfing, morning star, evening star) use the relationship between consecutive candles to signal potential trend changes.
Learn More
Candlestick reading is the foundation of chart pattern analysis. See Chart Patterns for a complete guide to multi-candle formations, breakout setups, and continuation patterns.
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Related Questions
What is a doji candlestick? A doji forms when a candlestick's open and close prices are nearly identical, producing a very small body or no body at all, with wicks extending above and below. It signals indecision in the market — neither buyers nor sellers controlled the session. A doji after a sustained trend is often interpreted as a potential reversal signal, but context (volume, surrounding candles, and overall trend) determines whether it is meaningful.
What is a hammer candlestick pattern? A hammer is a single candlestick with a small body at the upper end of the trading range and a long lower wick — at least two to three times the length of the body — with little or no upper wick. It appears after a downtrend and suggests that sellers pushed prices down significantly during the session but buyers stepped in and drove the price back up near the open. Traders interpret it as a potential bullish reversal signal, particularly when confirmed by higher volume or a bullish candle the following session.