Each candlestick shows four prices for one period (the open, high, low and close). The body spans the open and close. It's usually green (or white) if price closed higher than it opened, and red (or black) if it closed lower. The thin lines (wicks or shadows) show the highest and lowest prices reached. Reading a chart means looking at sequences of candles, their size, wicks and location, not single candles in isolation.
Candlestick charts are the default on almost every trading platform because they pack a lot of information into a small space. Once you can read one candle, you can read a trend, a rejection or a breakout.
Anatomy of a candlestick
| Part | What it shows |
|---|---|
| Open | First traded price of the period |
| Close | Last traded price of the period |
| High | Top of the upper wick: highest price reached |
| Low | Bottom of the lower wick: lowest price reached |
| Body | The range between open and close |
| Upper wick (shadow) | Distance from the body to the high |
| Lower wick (shadow) | Distance from the body to the low |
Colour: green or white means close above open (bullish period). Red or black means close below open (bearish period). Colours are configurable, so check your platform settings.
What the shapes tell you
- Long body, small wicks: one side was in control all period. Strong momentum.
- Small body, long wicks: both sides fought, with indecision or rejection.
- Long upper wick: buyers pushed up, sellers pushed back down (rejection of higher prices).
- Long lower wick: sellers pushed down, buyers pushed back up (rejection of lower prices).
- No body (doji): open ≈ close, meaning a balance of buyers and sellers.
Specific single-candle patterns: hammer, inverted hammer, shooting star, and the doji.
Score the Setup Before You Take It
TRADZY's Void Engine rates any setup 0–100 across 12+ variables: structure, trend alignment, volume, momentum and key levels.
Score a Setup Free →Timeframes: every candle is a zoom level
A daily candle contains all the 1-hour candles of that day, which contain all the 5-minute candles. A long lower wick on the daily chart might be a sharp morning sell-off and an afternoon recovery on the hourly chart.
| Timeframe | Typical use |
|---|---|
| Monthly / weekly | Long-term trend |
| Daily | Swing trading, key levels |
| 4-hour / 1-hour | Swing entries, intraday context |
| 15 / 5 / 1-minute | Day trading entries |
Start analysis on a higher timeframe, then zoom in. That's top-down analysis.
Reading sequences, not single candles
- Trend: are candles making higher highs and higher lows, or lower highs and lower lows?
- Momentum: are bodies getting bigger in the trend direction (acceleration) or smaller (exhaustion)?
- Pullbacks: small candles against the trend with light volume are usually healthier than big, fast counter-moves.
- Location: the same candle means more at support or resistance than in the middle of a range. See support and resistance.
- Volume: big candles on big volume carry more weight.
A quick reading exercise
Open any daily chart and describe the last 10 candles in one sentence each: size, colour, wicks and where they are relative to recent highs and lows. Then summarise: "Uptrend, pulling back to prior resistance, with shrinking red candles and a lower wick on the last one." That's a trade idea taking shape.
Beginner mistakes
- Trading every pattern regardless of location.
- Reading 1-minute candles without checking the daily trend.
- Ignoring wicks and focusing only on colour.
- Expecting patterns to "work" on their own without confirmation.
Ready for patterns? See bullish candlestick patterns and the candlestick cheat sheet. For charts in general, see how to read a trading chart.
TRADZY's Void Engine reads candle structure as one of its scoring variables, alongside trend alignment, volume and key-level proximity.
FAQ
What do green and red candles mean?
Green usually means price closed higher than it opened during that period. Red means it closed lower. Colours can be changed in chart settings.
What do the wicks on a candlestick mean?
They show the highest and lowest prices reached during the period. Long wicks show that price was rejected at those extremes.
What timeframe candlestick chart should beginners use?
The daily chart is the best place to learn trend and levels. Day traders then zoom into 15-minute or 5-minute charts for entries.
Are candlestick charts better than line charts?
They show more information: open, high, low and close, not just the close. That's why most traders use them.
How do you read a candlestick chart for day trading?
Start with the daily chart for trend and key levels, then read intraday candles for momentum, rejections and breakouts at those levels.
Put This Into Practice
- Score your next setup 0–100 with the Void Engine before entering
- Log the trade and tag the setup in the TradLog
- Review weekly: keep what pays, cut what doesn't
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Educational content, not financial advice. Trading involves substantial risk of loss.