In short
- Each candle shows the open, high, low and close for one period.
- The body shows open to close; the wicks show the extremes.
- Patterns describe the balance between buyers and sellers, but none predicts the future reliably on its own.
- Context such as trend, key price levels and timeframe matters more than any single candle.
Anatomy of a candle
Each candlestick represents one period, such as one minute, one hour or one day, and shows four prices:
- Open: the first price in the period.
- Close: the last price in the period.
- High and low: the extremes reached.
The thick part, the body, spans the open and close. The thin lines above and below, called wicks or shadows, reach up to the high and down to the low. If the close is above the open, the candle is bullish and is usually drawn green or white; if below, it is bearish and usually drawn red or black.
What candles tell you
A long body means one side controlled the period: a long green body shows buyers pushed the price up and held it there. A long upper wick shows buyers pushed prices up but sellers drove them back down before the close. Small bodies suggest indecision.
Common single-candle patterns
| Pattern | What it looks like | Usual interpretation |
|---|---|---|
| Doji | Open and close almost equal | Indecision; buyers and sellers balanced |
| Hammer | Small body at the top, long lower wick, after a fall | Sellers pushed down but buyers regained control |
| Shooting star | Small body at the bottom, long upper wick, after a rise | Buyers pushed up but sellers regained control |
| Marubozu | Long body with little or no wick | Strong one-sided pressure |
Common multi-candle patterns
- Bullish engulfing: a green body completely covers the previous red body, suggesting buyers took over.
- Bearish engulfing: the reverse, after a rise.
- Morning star: a large red candle, a small candle, then a large green candle, seen as a possible bottom.
- Evening star: the mirror image, seen as a possible top.
Timeframes
The same market can look bullish on an hourly chart and bearish on a daily chart. Longer timeframes include more trading and are generally considered more meaningful; shorter ones show more noise. Many traders check a higher timeframe for direction before looking at a shorter one for timing.
The limits of patterns
Candlestick patterns describe what happened; they do not guarantee what happens next. A hammer can be followed by further falls. Patterns tend to be more meaningful at important price levels and in the context of the broader trend, and less meaningful in quiet or choppy markets. Any trade based on a pattern still needs a stop-loss and a position size worked out in advance; see risk management and the position size calculator.
Candlestick charting is usually traced to rice traders in 18th-century Japan and was popularised in the West in the 1990s. It remains one of the most widely used chart styles in forex, stocks and crypto.
Frequently asked questions
What do red and green candles mean?
Green (or white) candles closed higher than they opened; red (or black) candles closed lower than they opened. Colours can be changed in most charting software.
Which candlestick pattern is most reliable?
No pattern is reliable on its own. Patterns carry more weight at important price levels, on higher timeframes and when confirmed by the following candles.
What timeframe should beginners use?
Many beginners find daily or four-hour charts easier to read, because they show less noise than one- or five-minute charts.