Reading candlesticks
Each candle compresses four numbers — open, high, low, close — into a shape that shows who won the session.
Anatomy
The body spans the open and close. The wicks reach to the session high and low. A filled or red body means the close was below the open; hollow or green means the opposite. That is the entire vocabulary.
A long body with short wicks says one side dominated from bell to bell. A small body with long wicks says price travelled far and settled back — indecision, or a failed push.
Common shapes
A doji has almost no body: open and close nearly equal, a balance of pressure. A hammer has a small body near the top with a long lower wick — sellers pushed price down and buyers reclaimed it. A shooting star is the mirror image.
These shapes describe what happened. They do not predict what happens next, and their usefulness depends entirely on location: a hammer at long-tested support is a different message from one in the middle of a range.
Timeframe changes everything
A dramatic five-minute candle can be invisible on a weekly chart. Decide your horizon first, then read candles on a timeframe that matches it, or you will react to noise.
Worked example
Same range, opposite stories
- Candle A: open 100, high 108, low 99, close 107.5 — long green body, small wicks.
- Candle B: open 100, high 108, low 99, close 100.2 — tiny body, long upper wick.
- Both traded the identical 99-108 range.
- A shows buyers holding the gains into the close; B shows an intraday rally that was completely sold.
The close relative to the range is the information. Range alone tells you volatility, not who won.
Common misconceptions
“A hammer means price will go up.”
It describes a rejection of lower prices in one session. Without context and confirmation it has no predictive guarantee.
“Green candles mean the stock is a good investment.”
Candles describe short-run price behaviour and say nothing about the underlying business.
Checkpoint