What you will learn
- Read the four prices, open, high, low, and close, in every candlestick
- Tell a bullish candle from a bearish one, and a body from a wick
- Interpret what a candle's shape suggests about buyers and sellers
- Recognize a few named shapes and why a single candle is a weak signal
Most modern price charts are drawn as candlesticks, a method that began with Japanese rice traders centuries ago and became the standard way to picture price action. A single candlestick packs four numbers, and a sense of the battle between buyers and sellers, into one compact shape. Learning to read them is the first practical skill of charting.
Candlestick charts: complete beginner's guide (MoneyZG)
A clear walkthrough of how a candle encodes the open, high, low, and close. Watch this first so the anatomy below makes sense.
The four prices in every candle
Each candlestick represents the price action over one period, whether that period is a minute, a day, or a month, and it encodes four prices: the open, which is the first trade of the period, the high, which is the highest price reached, the low, which is the lowest price reached, and the close, which is the last trade of the period. These are often abbreviated as OHLC.
Key terms
- OHLC
- The open, high, low, and close, the four prices every candlestick shows.
- Body
- The thick rectangle between the open and the close.
- Wick (or shadow)
- The thin line above or below the body, reaching to the high or the low.
- Bullish / bearish candle
- A bullish candle closes above its open (often green). A bearish candle closes below its open (often red).
Body and wicks
- The body is the thick rectangle between the open and the close. It shows where the bulk of the action settled.
- The wicks, also called shadows, are the thin lines above and below the body. They reach to the high and the low, showing the extremes the price touched before closing.
- A bullish candle, where the close is above the open, is usually drawn green or white. A bearish candle, where the close is below the open, is usually drawn red or black.
| Shape | What it looks like | What it hints |
|---|---|---|
| Long body | A big rectangle | A strong, decisive move, one side in control |
| Short body | A small rectangle | Indecision, open and close near each other |
| Long lower wick | Long line below a small body | Sellers pushed down but buyers pushed back |
| Long upper wick | Long line above a small body | Buyers pushed up but sellers pushed back |
Reading the message
The shape of a candle tells a small story. A long body signals a strong, decisive move in one direction, with buyers or sellers firmly in control. A short body signals indecision, with the open and close ending close together. Long wicks show that the price reached an extreme during the period but was rejected and pushed back before the close, which hints at a struggle between the two sides.
A candlestick is one round in the fight between buyers and sellers. The body shows who won the round, and the wicks show how hard it was fought.
A few common shapes
Several candle shapes have names because traders find them meaningful. A doji has almost no body, because the open and close are nearly equal, and it signals indecision or a possible pause. A hammer has a small body near the top with a long lower wick, suggesting buyers stepped in after sellers pushed the price down. A shooting star is the mirror image, with a long upper wick, suggesting sellers rejected a push higher. Engulfing patterns, where one candle's body completely covers the previous one's, are watched as possible signs of a shift in control.
Match the candle to its message
Pair each named candle shape with what it typically suggests.
Candlestick patterns for beginners (Rayner Teo)
A reputable educator on reading candles and simple patterns. Watch for how he stresses reading candles in context, not alone.
Read the candle
During a down day, a candle forms with a small body near the top and a long lower wick, meaning price fell sharply but recovered most of the drop before the close. What does this candle suggest happened?
A small body near the top with a long lower wick, called a hammer, shows sellers pushed price down but buyers regained control and closed it near the top. It hints at buying interest.A caution about single candles
Keep the honesty of the first lesson in mind. A single candlestick is a weak signal on its own, and the same shape appears by chance constantly. Candlestick patterns are most useful in context, alongside the trend, support and resistance levels, and volume, all of which you study next. Treat individual candles as small pieces of evidence to be weighed, never as standalone predictions.
One round, not the fight
The lesson compares a candle to one round in a fight between buyers and sellers. Explain in a sentence or two why a single candle should not be traded on its own.
Write an answer before comparing it with the model response.
Model answer
A single candle is just one period's tug of war, and the same shape shows up by chance all the time, so on its own it carries little information. It becomes meaningful only in context, when it lines up with the trend, a support or resistance level, or a change in volume. Treating one candle as a prediction ignores everything else the chart is saying.
You can now read a single candle. The next several lessons give candles the context they need, starting with the price levels where the fight between buyers and sellers tends to turn: support and resistance.