Candlestick

A candlestick is a chart element showing the open, high, low and close (OHLC) for one period. The body spans open to close; the wicks reach the high and low.

How it works

Each candle covers one slice of time, the timeframe: a minute, an hour, a day. If the close is above the open the candle is bullish (usually green); if below, bearish (usually red). The body shows where price went over the period, and the upper and lower wicks show how far it reached.

A long wick says price was pushed there but could not stay. A long lower wick at support, for example, means sellers pushed down and buyers bought it back. A small body with no direction signals indecision.

Several candles together form candlestick patterns: engulfing, pin bar, doji. On their own they are weak signals; they are more useful read together with levels, trend and volume.

Example with numbers 1

An hourly BTC candle: open $60,000, high $60,800, low $59,600, close $60,500. It is green, the body is $500 (from 60,000 to 60,500), the upper wick is $300 and the lower wick is $400.

Example with numbers 2

A daily EUR/USD candle opened at 1.0850, dipped to 1.0790 and closed at 1.0845. A 60-pip lower wick and a small body at support show that sellers were bought out.

Common mistake

Beginners often trade a single candle as a signal, worse, before it has closed: on the 1-minute chart a "hammer" turns into a plain red candle in seconds. Wait for the close, check a higher timeframe and look at context: where the candle sits relative to a level and the trend. One candle without context means almost nothing.

Questions and answers

What is a candlestick in simple terms?

It is a way to show on a chart how price moved over a period: where it opened and closed, and what the high and low were.

What do green and red candles mean?

Green means the close was above the open, so price rose during the period. Red means it closed below, so price fell. You can change the colors in chart settings.

What does a candle wick show?

The wick shows the high and low for the period. A long wick means price got there but was pushed back.

Candlestick

How it works

Questions and answers

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