Candlestick charts (OHLC)

Reading time ~6 min · Last updated 2026-07-17

Every technical indicator in this guide is computed from the data a candlestick shows. Learn to read one candle properly and the rest of the chart becomes a sentence instead of noise.

Anatomy of a candle

Each candle summarises one time period — 5 minutes, 1 hour, 1 day (the timeframe selector in the terminal offers 5m to 1d). It encodes four prices, hence OHLC: Open, High, Low, Close.

The body spans open→close; the wicks show the extremes the market visited but rejected.

Body — the open-to-close range: what the period actually achieved. Long body = conviction; tiny body = indecision.
Wicks (shadows) — prices visited but not held. A long lower wick means sellers pushed down and buyers slammed it back — rejection of lower prices.

Timeframes — the same market, different stories

A brutal red 5-minute candle can be an invisible blip on the daily chart. Neither view is "the truth"; they answer different questions. A practical habit: pick a higher timeframe for direction (1d/4h) and a lower one for timing entries (30m/5m) — and always know which one you are looking at before acting.

Volume — the conviction meter

The bars under the chart show how much was traded per candle. Price says what happened; volume says how much agreement backed it:

Breakout on high volume — many participants endorsing the move; more likely to hold.
Breakout on thin volume — few participants; more likely to be a fake-out that reverses.
Climactic volume spike after a long trend — often the crescendo where the last buyers (or sellers) exhaust themselves.

A few candles worth knowing (only a few)

Pattern	Shape	Reads as
Doji	Open ≈ close, tiny body	Stalemate — meaningful mainly after a strong trend
Hammer	Small body on top, long lower wick, after a decline	Sellers rejected — possible reversal, confirm with the next candle
Engulfing	Body completely swallows the previous candle's body	One side seized control this period

Honesty box

There are encyclopedias of named patterns. Most add little beyond these three ideas: conviction (body), rejection (wicks), and agreement (volume). Do not memorise fifty patterns; understand three mechanisms.

Heikin-Ashi — the smoothed alternative

Heikin-Ashi ("average bar") candles replace each true OHLC with averages of the current and previous periods. The result: trends paint as long unbroken runs of one colour, and noise disappears. Traders use them to stay in trends they would otherwise exit early — a colour flip is the exit cue. The cost is honesty: Heikin-Ashi closes are not real prices, so never read your entry, stop, or liquidation distance from them. Analyse on Heikin-Ashi if it suits you; execute on real candles.

Key takeaway

Candles compress crowd behaviour into four prices. Body = conviction, wick = rejection, volume = participation — every indicator that follows is arithmetic on these.

Anatomy of a candle

Each candle summarises one time period — 5 minutes, 1 hour, 1 day (the timeframe selector in the terminal offers 5m to 1d). It encodes four prices, hence OHLC: Open, High, Low, Close.

The body spans open→close; the wicks show the extremes the market visited but rejected.

Body — the open-to-close range: what the period actually achieved. Long body = conviction; tiny body = indecision.

Wicks (shadows) — prices visited but not held. A long lower wick means sellers pushed down and buyers slammed it back — rejection of lower prices.

Timeframes — the same market, different stories

Volume — the conviction meter

The bars under the chart show how much was traded per candle. Price says what happened; volume says how much agreement backed it:

Breakout on high volume — many participants endorsing the move; more likely to hold.

Breakout on thin volume — few participants; more likely to be a fake-out that reverses.

Climactic volume spike after a long trend — often the crescendo where the last buyers (or sellers) exhaust themselves.

A few candles worth knowing (only a few)

Pattern

Shape

Reads as

Doji

Open ≈ close, tiny body

Stalemate — meaningful mainly after a strong trend

Hammer

Small body on top, long lower wick, after a decline

Sellers rejected — possible reversal, confirm with the next candle

Engulfing

Body completely swallows the previous candle's body

One side seized control this period

Honesty box

Heikin-Ashi — the smoothed alternative

Key takeaway

Candles compress crowd behaviour into four prices. Body = conviction, wick = rejection, volume = participation — every indicator that follows is arithmetic on these.