How to read a candlestick

A candlestick compresses one session — a day, an hour, a five-minute bar, whatever you chose — into four prices:

• Open: where the first trade of that session printed.
• High: the highest trade.
• Low: the lowest trade.
• Close: the last trade of that session.

The rectangle between open and close is the body. The thin lines that stick out to the high and the low are the wicks (or shadows). If the close is above the open, that session closed up. If the close is below the open, it closed down.

I will also say that in words, not only in color. Green and red are useful, and this site uses teal and a clear red, but color is a poor sole signal if you ever print the page, share a screenshot, or look at it with color-vision differences. Label the direction.

What a wick is telling you

A long upper wick means the session traded much higher than it finished. A long lower wick means it traded much lower than it finished. That is a description of a rejected extreme, not a guarantee that the next session will continue the rejection. People name patterns around these shapes. A name is a nickname for a picture. It is not a tested rule until you write the rule and test it.

What a candle is not

A candle is not a forecast. The close of this session is simply the last agreement before the session ended. The next session starts a new auction. Gaps can appear between one close and the next open, especially when a market is closed or overnight liquidity is thin. A stop that looked safe on a closing chart can be skipped. That is covered later, when we talk about accepting risk.

Study charts on this site often mark ideas from closing prices. A close is not a known fill. If you use these pictures for practice, treat the entries as illustrations.

A habit to practice

Pick any daily candle on a public chart. Write four numbers: open, high, low, close. Then write one sentence: “This session opened at X, traded as high as Y and as low as Z, and closed at W.” Do that ten times. You are training your eye to see a record, not a story.

When you can do that without rushing to a pattern name, you are ready for trend and market structure.