How to Read a Candlestick Chart
Candlestick charts are the most widely used chart type in trading. Learn how to read them and what each component tells you about buyer and seller behavior.
Basics · May 26, 2026 · 5 min read
A candlestick represents price action over a chosen time period — one candle on a daily chart covers one day; on a 1-hour chart, one hour. Each candle has four data points: open, high, low, and close. The body of the candle spans from open to close; the wicks (or shadows) extend to the high and low.
Bullish vs Bearish Candles
A bullish candle (usually green or white) closes higher than it opened — buyers won the period. A bearish candle (usually red or black) closes lower than it opened — sellers won. The size of the body relative to the wicks tells you how decisive the outcome was. A large body with small wicks signals strong conviction; small bodies with large wicks signal indecision or rejection.
Reading Candles in Context
Individual candles rarely tell you much in isolation. A bullish candle at a key support level after a prolonged downtrend means something entirely different from the same candle in the middle of a ranging market. Always evaluate candles in context: trend direction, proximity to key levels, and timeframe.
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