How to read a candlestick chart

The idea in plain words

A candle is a tiny story of a fight between buyers and sellers. The thick part (the body) shows how far the price travelled from the start to the end of the period. The thin lines (the wicks or shadows) show how far it was pushed beyond that before being pushed back. A long body means one side clearly won; long wicks mean the price was tried and rejected.

How it is calculated

Open is the first price of the period, High the highest, Low the lowest and Close the last. The timeframe decides the period: on a 1-hour chart (H1) every candle is one hour, on a daily chart (D1) one day.

Green (rising) candle: Close is above Open
Red (falling) candle: Close is below Open
Body = distance between Open and Close
Upper wick = High − the higher of Open and Close
Lower wick = the lower of Open and Close − Low

How to use it

• Pick a timeframe that matches how long you plan to look ahead: minutes for very short trades, days or weeks for longer views.
• Look at several candles together rather than one: a row of long green bodies says buyers are in control.
• Compare timeframes: a falling day can still sit inside a rising week.

Drawing conclusions

• Long lower wicks near the same price on several candles suggest buyers keep stepping in there.
• A very long candle after a quiet period often marks the start of a bigger move.
• Small bodies with long wicks on both sides ("dojis") show indecision.

Watch out for

• A single candle is weak evidence; patterns need context such as trend and nearby levels.
• Our charts show times in UTC, so a daily candle starts at the broker's day boundary, which can differ from your local midnight.

A little history

Candlestick charts were developed in 18th-century Japan, traditionally credited to the rice trader Munehisa Homma. Steve Nison introduced them to Western traders in his 1991 book "Japanese Candlestick Charting Techniques".