A candlestick shows four prices for one time period, such as one day or one hour: the open, high, low and close (OHLC).
Anatomy of a candle
- Body: the range between the open and the close.
- Wicks (also called shadows): thin lines above and below the body, reaching to the high and low.
- Color: commonly green when the close is above the open and red when it is below. Platforms can change the colors.
What the shape tells you
- Long body: buyers or sellers controlled the period.
- Long wick: price went there but got pushed back.
- Small body with wicks on both sides (a doji): indecision, open and close nearly equal.
A few common patterns
- Hammer: small body, long lower wick. Sellers pushed price down, buyers pushed it back.
- Shooting star: small body, long upper wick. Buyers pushed up, sellers pushed it back.
- Engulfing: a candle whose body fully covers the previous candle's body, suggesting a shift in control.
How to use them
Patterns are context, not predictions. They matter more at levels the market already cares about, and they fail often. Check the time frame and volume before leaning on one.
Key point. No chart pattern works every time.
Education only, not investment advice. Trading involves real risk of loss, including loss of everything you put in. See the full disclaimer.