Candlestick chart
Also called: candlesticks · candles · Japanese candlesticks · OHLC chart
Definition
A candlestick chart is a price chart where each candle shows the open, high, low and close price of an asset over one time period.
How candlestick chart works
Each candle covers a fixed timeframe, such as 1 minute, 1 hour or 1 day. The thick part, called the body, runs from the opening price to the closing price. The thin lines above and below, called wicks or shadows, show the highest and lowest prices reached during that period.
Colour tells you direction. On most platforms a green candle closed higher than it opened, and a red candle closed lower. Some apps let you swap colours, and in some regional settings red means up, so check your chart settings.
Candles help you see how buyers and sellers fought during each period. A long lower wick means price fell but buyers pushed it back up. A small body with long wicks on both sides shows indecision. Traders combine candles with volume and support and resistance levels, but a single candle pattern is not a reliable prediction on its own.
Example
Take a 1-hour BTC candle that opens at 64,000 USDT, drops to 63,200, rises to 64,600 and closes at 64,400. The body runs from 64,000 to 64,400 and is green because the close is higher. The upper wick stretches from 64,400 to 64,600 (200 USDT), and the lower wick from 64,000 down to 63,200 (800 USDT). That long lower wick shows sellers pushed price down 800 USDT before buyers took it back.
Common mistakes
- Reading a pattern on a 1-minute chart as if it carried the weight of a daily candle.
- Acting on a candle before it has closed, when its shape can still change completely.
- Assuming green always means up without checking the platform colour settings.
Learn and practise
FAQ
What do the wicks on a candlestick mean?
Wicks show the highest and lowest prices traded during the candle's timeframe. Long wicks mean price moved far but was pushed back before the close.
Which timeframe should I use for candlestick charts?
It depends on how long you plan to hold. Short-term traders use minutes or hours, while longer-term holders usually focus on daily or weekly candles.