Reading candlestick charts
7 min readLesson 13
Open, high, low and close in one shape, and the handful of candles worth knowing.
A candlestick shows four prices for one period: where it opened, the highest and lowest prices reached, and where it closed. A one-hour chart draws one candle per hour.
The thick body spans open to close. The thin wicks show how far price travelled beyond the body before being pushed back.
What a candle tells you
- Large body, small wicks: one side was in control all period.
- Small body, long wicks: a fight with no winner, often indecision.
- Long lower wick: sellers pushed price down but buyers drove it back. A sign of demand.
- Long upper wick: the opposite, a sign of supply.
Candles worth knowing
| Candle | Shape | Common reading |
|---|---|---|
| Doji | Open ≈ close, wicks on both sides | Indecision |
| Hammer / pin bar | Small body near the top, long lower wick | Rejection of lower prices |
| Shooting star | Small body near the bottom, long upper wick | Rejection of higher prices |
| Engulfing | A body that completely covers the previous one | Momentum switching sides |
Context beats shape
A hammer in the middle of nowhere means little. A hammer at a support level after a pullback in an uptrend means much more. Always read candles where they form, not just how they look, and wait for the candle to close before acting on it.
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