Guide
How to Read Candlestick Charts: A Beginner's Guide
Each candle shows four prices for one period of time. Once you can read one candle, you can start reading the chart.
The parts of a candle
- Body: the range between the open and the close.
- Color: on most charts, green means the close was above the open and red means it was below. Colors can be changed in settings.
- Upper wick: the highest price reached in the period.
- Lower wick: the lowest price reached in the period.
What the shape tells you
A long body means price moved firmly in one direction during that period. A small body means the open and close were close together, so neither side won clearly. A long wick means price went there and was pushed back.
Timeframes change the picture
On a one-hour chart each candle is one hour, and on a daily chart each candle is one day. The same market can look like it is falling on one timeframe and rising on another, so check a higher timeframe to see the bigger trend.
Read groups, not single candles
One candle rarely tells you much. Look at where it appears and what came before it. A long lower wick at a known support level says more than the same candle in the middle of nowhere. Some named patterns use a few candles together, such as the morning star and evening star.
Common beginner mistakes
- Reacting before the candle closes. It can look very different by the end of the period.
- Memorising candle names without looking at their location on the chart.
- Reading very low timeframes, where there is a lot of noise.
Related patterns
Educational only. Not financial advice or trading signals.