Candlestick
A chart element showing the open, high, low and close for one period.
Also called: candle · candles · ohlc
Written by Javier Sánchez Ros
In plain language
The body spans the open and close; the wicks show the extremes reached during the period. Color indicates whether the close was above or below the open.
Wicks carry the interesting information. A long lower wick means price was pushed down and then bought back up — rejection of lower prices within that period.
A candle summarizes a battle but hides its sequence. A doji tells you the period ended where it started, not the path it took to get there.
Worked through
Four numbers, and the story they do not tell
- Open
- $25.10
- High
- $26.80
- Low
- $24.90
- Close
- $25.20
A long upper wick and a close near the open: price was bid up almost two dollars and gave all of it back. That is a genuine observation about the session — sellers appeared above $26 — and it is the whole of what the candle knows.
What it does not record is the order. Price might have run to $26.80 in the first ten minutes and drifted down all day, or hovered flat and spiked near the close. Those are different sessions with different implications and they produce an identical candle.
This is worth holding onto because everything else is built on these four numbers. Support levels, moving averages, RSI, ATR — all of them are transformations of open, high, low and close, so all of them inherit the same blind spot.
Which argues for using candles as evidence rather than as signals. A long wick at a level you already cared about is useful confirmation; the same wick in the middle of nowhere is one session’s noise wearing a pattern’s name.
Seen on a chart
Why it matters
Candles are the raw material of technical analysis. Every level, pattern and indicator is built from the same four numbers.
Common mistakes
- Reading single candles in isolation rather than in the context of structure.
- Trading a pattern before the candle has closed.
- Forgetting that candle shape changes entirely with the chosen timeframe.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
A candle that opens and closes at nearly the same price, showing indecision.
The number of shares, contracts or units traded during a period.
The period each candle on a chart represents, from one minute to one month.
A jump between one period’s close and the next period’s open with no trading in between.
A price area where buying has repeatedly been strong enough to stop a decline.