Candlestick charts

A candlestick packs everything that happened to a price during one period of trading into a single shape. Once you can read its four values and its two parts, a chart stops being a wall of colour and starts telling you a clear story about how buyers and sellers moved the price.

The four prices in every candle

Every candlestick summarises one period of trading with four prices, often shortened to OHLC. The open is where price started, the high is the furthest it rose, the low is the furthest it fell, and the close is where it finished the period.

The anatomy of a candle

The thick rectangle in the middle is the body, and it stretches between the open and the close. When the close sits above the open the candle is bullish, usually shown in a light or green colour; when the close sits below the open it is bearish, usually dark or red.

The thin lines above and below the body are the wicks, also called shadows or tails. The top of the upper wick marks the high of the period and the bottom of the lower wick marks the low. A long wick shows that price reached a long way in that direction before returning toward the close.

Timeframe changes what a candle means

The period a candle covers is set by the timeframe you choose. On a one-minute chart each candle is one minute of trading; on a daily chart a candle that looks identical represents a whole day. As an illustration, a sharp move that fills a five-minute candle might appear as only a small wick on the daily chart.

Patterns hint at momentum, they do not predict

Traders group candles into patterns and read them as clues about momentum or hesitation, such as a large body appearing after several small ones. These patterns describe what has already happened rather than forecasting the next move. A pattern can suggest that buying or selling pressure is building without offering any certainty about what comes next.