Candlestick Basics

One candle, four prices

Every candle on a chart compresses a slice of time — a minute, an hour, a day — into four numbers: open, high, low, close. The body shows where price started and ended. The wicks show how far price reached and got rejected.

That's the whole primitive. Everything downstream — patterns, indicators, systems — is just arithmetic on these four numbers across many candles.

Bull vs bear

• A bullish (green) candle closes above its open. Buyers finished on top.
• A bearish (red) candle closes below its open. Sellers finished on top.

The color is not magic; it's just a readability convention. What matters is the relationship:

• Where the close sits inside the candle's range (near the top? near the bottom?)
• How long the body is relative to the wicks
• Where in the chart the candle appears — a hammer at a major low ≠ a hammer in the middle of a range

Context over pattern. A candle's meaning depends entirely on where it appears. A bullish engulfing in the middle of chop is noise. The same pattern at a well-tested support, on rising volume, is a signal worth studying.

Reading the tape

Here's ~60 days of synthetic price action. Hover any bar to read its OHLC. Notice how the same body size means very different things in trends vs ranges.

Two habits to build, starting now:

1. Read the last bar first. Before any indicator, ask: did buyers or sellers finish in control? By how much?
2. Zoom out. The meaning of any single candle is set by the twenty candles around it. Always.

Quick check

What you now know

• A candle is a four-number summary of one time slice: O, H, L, C.
• Wicks are rejections; bodies show where the session settled.
• Color tells you who finished in control; context tells you whether it matters.
• Two habits: read the last bar first, and always zoom out.

Next: Bid, Ask, and Spread — how those four numbers actually get set by the order book.