Anatomy of a candlestick
Learn how to read a single candlestick: the open, high, low, and close, the body and the wick, and the difference between a bullish and a bearish candle.
Part of the Reading the Market: Charts and Data track on Agenticks. About 9 minutes, written for a beginner reader.
A line chart shows one price per period, usually the closing price. A candlestick shows four. That is the whole reason candles are everywhere: one small shape packs in where a period opened, how high it went, how low it went, and where it finally settled. Once you can read a single candle, you can read a chart made of thousands of them. The style is old. It came from Japanese rice traders centuries ago and stuck around because it solves a real problem: a plain line hides everything that happened between the closes. A candle keeps that detail in a shape your eye can read at a glance, so a whole period of trading becomes one quick picture instead of a single dot. That is the entire job of this lesson, learning to read that one picture, because every chart in this track is just a row of them.
The four prices a candle records are the open, the high, the low, and the close. Together they are called OHLC. The open is the first price that traded when the period began. The close is the last price that traded when the period ended. In between, the high is the most expensive price reached and the low is the cheapest. A one hour candle just bundles everything that happened in that hour into those four numbers. Notice that two of those four prices decide where the candle starts and ends, and the other two decide how far it stretched. The open and the close are the endpoints of the move. The high and the low are the extremes price touched along the way, whether or not it stayed there. That split is the key to reading a candle: the open and close tell you where the period began and finished, while the high and low tell you the full range it covered in between. A wide gap between high and low means price ranged a lot inside that single period, even if it opened and closed close together.
The body is the open to close range
The thick rectangle is the body, drawn between the open and the close. Its height shows how far price traveled between those two points. A tall body means a decisive move; a short body means price barely went anywhere by the end. The thin lines poking out are the wicks (also called shadows): the upper wick reaches up to the high and the lower wick reaches down to the low. Wicks mark prices that were touched but did not hold into the close.
Color tells you direction at a glance. When the close is above the open, the candle is bullish, usually drawn green or left hollow: price finished the period higher than it started. When the close is below the open, the candle is bearish, usually drawn red or filled: price finished lower than it started. That is all the words mean. A bullish candle describes one period that closed up. It is not a prediction that the next candle goes up too.
Wicks show where price was rejected
A long wick means price stretched in one direction and then came back before the close. A long upper wick says buyers pushed price up but could not hold it there. A long lower wick says sellers pushed price down but it recovered. The wick records the round trip; the body records where things settled.
Once you see the body and wicks separately, the overall shape of a candle starts to describe what the period was like. A candle with a tall body and barely any wicks means price moved in one direction and mostly stayed there, opening near one end and closing near the other. A candle with a tiny body and long wicks on both sides means price swung up and down a lot but finished close to where it started, so the period was busy but indecisive. It is worth being careful here. These shapes describe what already happened inside the period, nothing more. A long lower wick tells you price fell and recovered during that bar. It does not tell you the next bar goes up. People love to read fortunes into single candles, and that is exactly the trap to avoid. A candle is a clean summary of one slice of time. Reading the shape honestly means describing that slice, not predicting the next one. The size of a candle is also relative. A body that looks huge on a quiet day might be ordinary on a busy one, so you read a candle against the candles around it, not against some fixed idea of big or small. Context is the whole game, and a single candle is only ever one piece of it.
- Open
- The first price traded when the period began
- Close
- The last price traded when the period ended
- High
- The most expensive price reached in the period
- Low
- The cheapest price reached in the period
- Body
- The thick range between the open and the close
A candle opens at 100, dips to 98, spikes to 105, and closes at 103. Is it bullish or bearish, and where is the close on the candle? Bullish, because the close (103) is above the open (100) The close sits above the open, so the candle is bullish and usually drawn green or hollow. The body runs from 100 up to 103.
close body wick
Drag to group the bars into bigger candles. Watch how several small candles fold into one, keeping only the first open, the last close, and the highest high and lowest low.
You can read one candle
You know the four prices a candle records (open, high, low, close), how the body and wicks are drawn, and how to tell a bullish candle from a bearish one. Every chart you read from here is just many of these in a row.
Common questions
- What four prices does a candlestick show?
- Every candlestick shows the open, the high, the low, and the close for one period of trading. Those four values are often shortened to OHLC.
- What is the difference between the body and the wick?
- The body is the thick rectangle drawn between the open and the close. The wicks are the thin lines that reach up to the high and down to the low. The body shows where price settled; the wicks show how far it stretched.
- How can I tell a bullish candle from a bearish one?
- A bullish candle closes above where it opened and is usually green or hollow. A bearish candle closes below where it opened and is usually red or filled. The words just describe up or down for that period; they do not predict the next move.
Terms defined in this lesson
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