Every candle on your screen compresses a fixed slice of time — one minute, one hour, one day — into four prices: where trading opened, the highest it reached, the lowest it reached, and where it closed.
The four prices
The rectangle in the middle is the body. It spans the open and the close. The thin lines above and below are the wicks (also called shadows or tails), and they reach to the high and the low.
Colour tells you the direction: if the close is above the open the candle is green (or white/hollow), and if the close is below the open it is red (or black/filled). That is the whole convention.
Candlestick lab — click any pattern to draw it
InteractiveWhy the wicks matter more than the body
Beginners read the body and ignore the wicks. That is backwards. The body tells you the net result; the wicks tell you the argument.
A long lower wick means price fell to that level and was bought back up before the candle closed. Someone was waiting down there with enough size to reverse the move. That is genuine information about where demand lives — and it is information you get nowhere else on the chart.
- Long wick, small body — a fight happened and neither side won cleanly. Price was rejected from an extreme.
- Long body, tiny wicks — one side dominated from open to close with little pushback.
- Wicks both sides, small body — genuine two-way indecision; the market probed both directions and settled in the middle.
Timeframes change the story
The single most common beginner error is treating one timeframe as the truth. A daily candle with a long lower wick is made up of dozens of hourly candles that, on their own chart, looked like a brutal downtrend followed by a sharp recovery. Same data, opposite emotional impression.
| Timeframe | One candle covers | Typically used by |
|---|---|---|
| 1m / 5m | A minute or five | Scalpers; extremely noisy, dominated by costs |
| 15m / 1h | A quarter-hour or an hour | Day traders timing entries within a daily view |
| 4h | Four hours | Swing traders; a good balance of signal and noise |
| 1D | One trading day | Swing and position traders; the reference timeframe for most analysis |
| 1W | One week | Position traders and investors reading the primary trend |
The professional habit is to read top-down: establish direction and key levels on a higher timeframe, then drop down to time the entry. Never let a five-minute candle talk you out of a daily-chart thesis.
What a candle cannot tell you
Be clear about the limits, because a lot of bad trading comes from over-reading a single bar:
- It does not show the path. A candle with equal wicks might have gone up then down, or down then up. You cannot tell which from the candle alone.
- It does not show volume. A big candle on almost no volume means far less than the same candle on heavy volume.
- It does not show context. A hammer in the middle of a range is noise. The same hammer at a level that has held three times is a signal.
- The close is arbitrary. A daily candle closes when that exchange closes. In forex and crypto, where there is no natural close, the boundary depends on your broker's chosen timezone.
Next: the named patterns, what they claim, and how much of that claim survives contact with reality.