The Candlestick: The Story in One Bar

The candlestick is the most common building block of a price chart. Each candle is a complete summary of one period of time, whether that is one minute, one day or one week. Once you can read a single candle properly, you can tell whether buyers or sellers were in control during that period.

Four prices in one candle

Every candle shows four numbers:

Name	Meaning
Open	The first traded price of the period
High	The highest price reached
Low	The lowest price reached
Close	The last traded price of the period

The thick part is the body, spanning the open and the close. The thin lines above and below are the wicks (or shadows), reaching to the high and the low. If the close is above the open, the candle is bullish, usually green; otherwise it is bearish, usually red.

The story a candle tells

The size of the body and wicks describes the tug-of-war between buyers and sellers:

• Long body, short wicks: one side held control for nearly the whole period.
• Long lower wick: sellers pushed price down, but buyers took it back. This can signal rejection of lower prices.
• Long upper wick: buyers tried to push higher but could not hold the gains.
• Very small body (doji): open and close are nearly equal; the market was undecided.

A Bitcoin example

Imagine BTC rallies during the day to just below a previous high, then closes almost exactly where it opened, leaving a long upper wick. That candle on its own is not a sell instruction, but it does tell you sellers were active in that area. The meaning of a candle always depends on where it forms. The same shape in the middle of an unimportant range carries a much weaker message.

Limitations

A candle covers a single period. Acting on one isolated candle, without regard to the trend, the key levels nearby and confirmation from the candles that follow, is a common error. Also remember that a candle's shape depends on the timeframe: four 1-hour candles combine into one 4-hour candle that may look completely different. Treat a candle like a sentence whose meaning is completed by the sentences around it.

Key takeaways

• Every candle holds four prices: open, high, low and close.
• The body shows who won the period; the wicks show prices that were rejected.
• A candle's meaning depends on its location on the chart.
• No single candle is a complete signal by itself.