Guide · Candlesticks
The short answer
A candle encodes four prices and nothing else. What it shows, what the proportions mean, and the one thing it cannot tell you.
A candlestick encodes four numbers and nothing else: the price at the start of the period, the highest and lowest reached during it, and the price at the end. Open, high, low, close — usually written OHLC.
The body spans the open and the close. The lines above and below are the wicks — also called shadows or tails — reaching to the high and the low. The colour convention says which of open and close is higher, and that is all it says.
Everything a single candle tells you is in the proportions of those three parts against the bar’s full range.
| Shape | What it says |
|---|---|
| Large body, small wicks | Price moved in one direction and mostly stayed there. Both sides had a view; one of them won. |
| Small body, long wicks both sides | Price travelled a long way in both directions and finished near where it started. Disagreement, not direction. |
| Small body at the top, long lower wick | Price was driven well below the close and did not stay there. This is the hammer and hanging man shape. |
| Small body at the bottom, long upper wick | The mirror: pushed up, rejected. Inverted hammer and shooting star. |
| Almost no body at all | Open and close within a hair of each other — a doji. Indecision by construction. |
None of that is a prediction. It is a description of what happened inside one period, and the whole question this site exists to test is whether such descriptions precede anything.
Reading candles by eye is where most people stop. Every formation page here goes one step further and states the shape as arithmetic, because "small body" is not a threshold and cannot be counted.
Once those four are numbers, a rule can be run, counted, and disagreed with. That is the entire difference between reading a chart and testing it — see the hammer page for a worked example of all four.
A candlestick does not record the order things happened in. It gives you the high and the low, but not which came first.
A bar with a long lower wick might have fallen hard and recovered — the standard reading. Or it might have risen, sold off late, and bounced in the closing seconds. Both produce an identical candle, and the two describe completely different sessions.
Where this goes wrong
This is why a formation on a daily chart can look decisive and dissolve when you drop to hourly bars: the lower timeframe shows the sequence the daily candle hid. The candle is a summary, and summaries lose information by design.
It also means any story about "buyers stepping in at the low" is an inference, not something the candle records. The tradition is full of such stories. They may be right; the candle is not the evidence.
Each candle covers a period you choose. The choice changes what you are measuring more than beginners expect.
| Timeframe | What a candle represents |
|---|---|
| Daily | A full session, with a meaningful open and close. This is what the tradition was built on. |
| 4-hour | A block that usually spans one major session. Still coherent. |
| 1-hour | A clock boundary. The close is where the hour ended, not where anything concluded. |
| 5-minute | Mostly spread and order flow. The body is often smaller than the cost of trading it. |
Shorter bars produce more signals and proportionally larger costs, because the spread is paid per trade while the move shrinks. The intraday guide covers what that does to the evidence required.
Worth knowing
Reading the shape correctly and knowing whether the shape matters are separate skills. This page is about the first. The candlestick patterns index is about the second, and it is honest about which parts are currently measured.
How do you read a candlestick chart?
Each candle encodes four prices: open, high, low and close. The body spans the open and close; the wicks reach to the high and low. The proportions between them describe what happened inside that period — a large body means one side won, long wicks both sides mean disagreement.
What does a long lower wick mean?
Price traded well below where the candle closed. It is conventionally read as buyers rejecting lower prices, but the candle does not record the order events happened in, so that reading is an inference rather than something the data shows.
Can you tell if the high or the low came first?
No. A candlestick records the four prices but not their sequence. A bar that fell and recovered and a bar that rose, sold off and bounced can produce an identical candle. Dropping to a lower timeframe is the only way to see the order.
What timeframe should I read candles on?
Daily bars have a real open and close and are what the tradition was built on. Hourly and shorter bars close on a clock boundary rather than at anything meaningful, produce more signals, and pay the spread far more often relative to the move.
What is the difference between the body and the wick?
The body is the distance between the open and the close. The wicks are the lines beyond it, reaching to the high and the low. Most candlestick rules are conditions on the body as a share of the full range, and on the wicks as a multiple of the body.