How to read candlestick charts

How to read candlestick charts

Candlesticks are the standard way price is displayed on almost every trading platform. Each candle represents one unit of time — a minute, an hour, a day — and tells you four things at once: the open, the high, the low, and the close.

The anatomy of a candle

Every candle has two parts:

• The body — the thick part, showing the range between the open and the close
• The wicks (or shadows) — the thin lines above and below the body, showing the highest and lowest price reached during that period

A green (or white) candle means the close was higher than the open — buyers won that period. A red (or black) candle means the close was lower than the open — sellers won that period.

Why candlesticks matter more than line charts

A line chart only shows you the closing price. A candlestick shows you the entire fight that happened during that period — how high buyers pushed, how low sellers pushed, and who ultimately won. This is the raw material of price action trading.

Two candles can close at the exact same price and tell completely different stories depending on their wicks.

Reading wicks

Long wicks tell you a story:

• A long upper wick means price was pushed up but rejected — sellers stepped in and pushed it back down
• A long lower wick means price was pushed down but rejected — buyers stepped in and pushed it back up
• No wicks (a strong full-body candle) means one side was in complete control the entire period

Reading candle size

A large body means strong conviction — one side dominated decisively. A small body (sometimes called a doji when open and close are nearly equal) means indecision — neither buyers nor sellers had control.

Putting it together

When you look at a chart, don't just see "up" or "down." Ask: who won this candle, how decisively, and did either side get rejected? This is the skill that everything else in price action trading is built on.

• Every candle shows the open, high, low, and close for that time period
• The body shows the open-to-close range; wicks show the full high-to-low range
• Long wicks indicate rejection — price was pushed one way but reversed
• Candle size reflects conviction — large bodies mean decisive control, small bodies mean indecision