Reading Candlestick Charts
Candlestick charts are the universal language of trading. Every serious trader reads them. Here's how to decode what they're telling you.
OHLC — The Four Data Points
Every single candlestick encodes four pieces of information about a specific time period:
Open
The price at the start of the period
High
The highest price reached during the period
Low
The lowest price reached during the period
Close
The price at the end of the period
Green vs Red Candles
Green (Bullish) Candle
The close is higher than the open. Price went up during this period. The bottom of the body is the open; the top is the close.
Red (Bearish) Candle
The close is lower than the open. Price went down. The top of the body is the open; the bottom is the close.
Wicks (Shadows)
The thin lines above and below the body are called wicks (or shadows). They show the intraday extremes — how far price travelled before being pushed back.
Key Concept
A long lower wick means sellers pushed price down but buyers fought back and closed it higher — a sign of buying pressure. A long upper wick means buyers pushed price up but sellers rejected it — selling pressure.
Body Size = Strength, Wick Size = Rejection
- •Large body, small wicks — strong conviction. Buyers (or sellers) dominated the entire period.
- •Small body, large wicks — indecision. Neither side could maintain control.
- •No body (Doji) — open and close are virtually the same. A battle that ended in a draw.
Timeframes
Each candle represents a fixed period of time. Common timeframes range from 1-minute to weekly:
- • 1-minute / 5-minute — scalping and day trading
- • 15-minute / 1-hour — intraday swing
- • 4-hour — short-term swing trading
- • Daily — the sweet spot for beginners
- • Weekly / Monthly — long-term trend analysis
Beginner Tip
Start with the daily chart. It filters out the noise of lower timeframes and gives you a clearer picture of what's actually happening. Once you're comfortable, zoom into 4-hour or 1-hour.
Risk Warning
Trading financial instruments carries a high level of risk and may not be suitable for all investors. You could lose some or all of your invested capital. Never trade with money you cannot afford to lose. This content is for educational purposes only and does not constitute financial advice.