How to Read Candlestick Charts
Candlestick charts are the default view on most trading platforms, including the charts on this site. Each candle summarises price action over one period, whether that period is one minute, one hour or one day.
Anatomy of a candle
- Open: the first traded price of the period.
- Close: the last traded price of the period.
- High and low: the extremes reached during the period.
- Body: the thick part between open and close.
- Wicks (shadows): the thin lines reaching to the high and low.
A candle that closes above its open is bullish (usually green). One that closes below its open is bearish (usually red).
What candles tell you
A long body shows strong conviction in one direction. Long wicks show rejection: for example, a long upper wick means buyers pushed price higher but sellers drove it back down before the close. Small bodies with wicks on both sides show indecision.
Common single and two-candle patterns
- Doji: open and close almost equal, a sign of balance or indecision.
- Hammer: small body near the top and a long lower wick after a decline; buyers stepped in.
- Shooting star: small body near the bottom and a long upper wick after a rally; sellers stepped in.
- Engulfing: a candle whose body fully covers the previous candle's body, suggesting a shift in control.
Timeframes matter
The same market can look bullish on a 15-minute chart and bearish on a daily chart. A useful habit is to start with a higher timeframe (weekly or daily) to see the main trend, then zoom in for detail. On our charts you can switch timeframes with the interval buttons above the chart.
Context beats patterns
A pattern on its own means little. It becomes more meaningful when it forms at an important level, such as prior support or resistance, and is confirmed by the next candles.
Educational content only, not financial advice. See our disclaimer.
Next guide: Price Action Basics: Trends, Swings and Market Structure