A candlestick chart packs four prices into a single shape for each period, whether that is a minute, a day, or a week. Learning to read them helps you see who is in control, buyers or sellers.
Anatomy of a candle
Each candle has a body and thin lines called wicks or shadows. The body spans the open and close prices. The wicks reach the highest and lowest prices reached in that period. A green (or hollow) candle usually means the close was higher than the open; a red (or filled) candle means the opposite.
What shapes suggest
- Long body: strong buying or selling pressure.
- Small body with long wicks: indecision, as price moved a lot but returned.
- Doji: open and close nearly equal, a pause in momentum.
- Hammer: small body with a long lower wick, sometimes seen near a bottom.
Common patterns
A bullish engulfing pattern happens when a large green candle fully covers the prior red one, hinting buyers are taking over. A bearish engulfing pattern is the reverse. Morning and evening stars use three candles to suggest possible reversals.
Use context
No single candle predicts the future. Combine patterns with support and resistance levels, volume, and the broader trend. Confirm signals before acting, and always decide your exit in advance. Practise on past charts before using real money.