How to Read a Candlestick
Candlesticks show four prices for one slice of time: the open, the high, the low and the close. The thick body spans the open to the close, and the thin wicks reach out to the high and the low. Green means the candle closed above its open; red means below.
Candlesticks are what every price chart is built from, so it is worth being exact about what one actually contains — and about the three things people read into them that are not there.
How to read one
A candlestick is four prices for one slice of time.
The open is where the period started. The close is where it ended. The high and low are the furthest price reached in each direction. The thick part is the body, spanning open to close, and the thin lines are wicks, reaching out to the high and the low.
If you are on a one-hour chart, each candle is one hour of trading compressed into those four numbers. Everything else on the chart is drawn on top.
Colour means one thing
Green means the close was above the open. Red means it was below. That is the entire meaning, and it is worth stating because beginners routinely read colour as strength or as a signal.
A red candle in a strong uptrend is not a warning. It is one period that finished lower than it started, which happens constantly inside moves that go straight up.
Body versus wick
This is the distinction that does the most work.
The body is the conclusion. The wick is the argument. A candle that is nearly all body settled the period — price went one way and stayed there. A candle that is nearly all wick means price travelled a long way in both directions and finished roughly where it began.
Same range, opposite meanings.
A long wick is a rejection
A long wick points at a price the market visited and would not stay at. It tells you where the rejection happened, which is genuinely useful — and it says nothing at all about what comes next.
When open and close are nearly equal
A candle with almost no body covered its range and ended where it started. It is not a prediction — it is an accurate description of a period in which nobody won.
The candle on the right is still moving
Worth knowing early, because it catches almost everyone once.
The rightmost candle is not finished. On a one-hour chart it is being built for the whole hour. Its high and low only ever grow, and its close is wherever price happens to be right now — so it changes every second until the hour ends.
That means a candle can look like a perfect rejection at minute forty and close as something else entirely at minute sixty. The shape you are looking at is not the shape it will end up as.
This is the concrete reason behind the rule that a break needs a close beyond a level rather than a touch. Until the period ends, there is no close to speak of — only a price that is still moving.
A candle is an arbitrary box
This is the part most explanations leave out, and it changes how you read everything above.
Nothing in the market knows when your candle starts or ends. The boundaries come from the timeframe you happened to open. A dramatic wick on the five-minute chart may not exist at all on the one-hour, because the hour closed somewhere else entirely.
So a candle is not an event. It is a summary, and you chose the length of the summary.
Where it printed matters more than its shape
Two identical candles, one at a level that already mattered and one in the middle of nowhere. The shape is the same and the meaning is not. A rejection candle at a level is a rejection of that level; the same candle floating in open space is a period of trading.
This is why candle shapes learned on their own tend not to survive contact with a real chart. It is also the reason price action — reading a chart from the bars alone, with no indicator on it — is harder than it sounds: the bars do not carry their own context.
Check the bar underneath
Volume says how much actually traded. The same candle on heavy volume and on light volume are different events, and the volume panel is right there under the chart by default.
A worked example
Take the long-wick candle above and read it honestly.
What you know. Price opened, fell a long way, came back, and closed near its open. That is not interpretation — it is the four numbers.
What you can infer. Sellers pushed price down and could not keep it there. Something met them lower and pushed back before the period ended.
What you cannot infer. Anything about the next candle. The rejection is a fact about the period that just finished, not a statement about the one that has not started.
What makes it usable. The level it rejected from, whether that level existed before today, and whether the volume was unusual. Three checks that live outside the candle itself.
The original data
Across our study of 24,971 trading videos, 703 cover candlesticks. The median one gets 4,063 views, 70% never pass 50,000, and the median length is 12.4 minutes.
The corpus carries description text for 253 of those 703, and across those 253, zero mention invalidation, failure, or what a bad read looks like. Not a small number — none.
On the most-taught topic for beginners in the entire study, nobody is describing what it looks like when the reading is wrong.
When it fails
The textbook shape leads nowhere
This candle is identical to the rejection candle earlier on this page and price went the other way. Nothing about the candle distinguishes the two, which is the honest position and the one those 253 descriptions leave out.
You are reading one candle in isolation
A single candle is one period out of hundreds. It carries real information about that period and almost none about the market. The context is where the meaning is — the level, the trend, the volume.
You found it afterwards
Every meaningful candle is obvious once you can see what followed. Cover the right-hand side and most of them stop looking meaningful at all.
Related
Support and resistance is the next thing to learn, because a candle only starts meaning something once you know what it printed at.
Market structure is how single candles become a readable pattern of highs and lows.
And an order block is one specific candle picked out of a sequence, so it is worth being comfortable reading one first.
Something I do that I have never seen anyone else teach: when a chart gets confusing I turn the wicks off entirely for a minute. With just the bodies you can see where things actually opened and closed and the shape of the move gets obvious. I do not like trading that way - honestly the wicks freaked me out the first time I took them away and then put them back - but as a way of checking what I am looking at, it works. The other rule I hold to is that a break is not a wick through a level. It is a candle closing beyond it, and then the next candle going the same way.
— Michael Whitman, from this video
This page is educational, not financial advice. Test every idea on your own charts before risking money.