A candlestick chart shows four price points for each time period: open, high, low, and close. Each candle has a body (the range between open and close) and wicks (the highs and lows beyond that range). A green or white body means the close was higher than the open. A red or black body means the close was lower. The top wick reaches the period's high, the bottom wick reaches the low.
That is the simple version. The real skill is reading what the shape tells you about who was in control.
The body tells you who won the session.
A long green body means buyers dominated from open to close. The price opened near the low, closed near the high, and stayed there. A long red body means sellers controlled the session. The price opened near the high, closed near the low, and sellers never let it recover.
A short body, sometimes called a doji or spinning top, means neither side won. Open and close were almost the same. That is a pause. It tells you the prior trend may be losing steam.
The wicks tell you where the fight happened.
A long upper wick on a green candle means buyers pushed the price up, but sellers fought back and dragged it down before the close. The close was still above the open, but the rejection at the top matters. That wick marks a price level where sellers stepped in.
A long lower wick on a red candle means sellers drove the price down, but buyers stepped in and pushed it back up. The close was still below the open, but the bounce off the low matters. That wick marks a level where buyers defended.
A candle with a long upper wick and a long lower wick, with a tiny body in the middle, is a doji. It means both sides fought hard and neither won. The market is indecisive.
A practical example.
Say you see a series of long green candles. Each one opens near the low, closes near the high, and has almost no upper wick. That is strong buying. Buyers are in control. Then you see a candle with a small green body and a long upper wick. The close is still higher than the open, but the wick tells you sellers started pushing back at that level. That is a warning. If the next candle opens lower and closes red, the buying momentum has broken.
The key terms a beginner needs.
Open. The first trade price of the period. Close. The last trade price. High. The highest price reached. Low. The lowest price reached. Body. The range between open and close. Wick or shadow. The lines above and below the body. Bullish candle. Close higher than open. Bearish candle. Close lower than open. Doji. Open and close are nearly equal.
A simple checklist for reading any candle.
Is the body green or red? That tells you who won the session.
How long is the body relative to recent candles? A longer body means stronger control. A shorter body means weaker control.
Where are the wicks? A long upper wick means sellers rejected the high. A long lower wick means buyers rejected the low.
Where did the candle close relative to its range? A close near the high is strong for buyers. A close near the low is strong for sellers.
What did the prior candle look like? A single candle means little. The sequence matters more.
Risk context.
No single candle predicts the next move. A doji after a rally does not guarantee a reversal. It only tells you buying momentum paused. The pause could be a consolidation before the next leg up. Traders who treat every doji as a reversal signal get stopped out repeatedly. The same applies to any single candle pattern. Use candles as one piece of evidence, not the whole case.
Candlestick charts work on any timeframe. A one minute candle and a weekly candle use the same four data points. The interpretation changes with context. A long wick on a one minute chart during a news event is noise. A long wick on a weekly chart at a major price level is a signal.
A worked example with numbers.
A stock opens at $50.00. It rises to $52.00, falls to $49.50, and closes at $51.50. The candle is green because $51.50 is above $50.00. The body runs from $50.00 to $51.50. The upper wick runs from $51.50 to $52.00. The lower wick runs from $50.00 to $49.50. The close is near the high, which is positive. But the lower wick tells you sellers pushed the price below the open before buyers took control. That is a warning. The buyers won the session, but they had to fight for it.
Compare that to a candle that opens at $50.00, rises to $52.00, and closes at $51.90 with no lower wick. That is cleaner buying. No seller resistance below the open. The lower wick in the first example adds information the second candle does not have.
What beginners get wrong.
They memorize pattern names. Hammer, shooting star, engulfing, morning star. Those patterns work sometimes, but the underlying logic is always the same. A hammer is a candle with a long lower wick and a small body at the top of the range. It looks like a reversal signal. But the logic is simply that buyers rejected the low. That is useful information whether or not you call it a hammer. Focus on the wicks and the body position. The names are shortcuts, not rules.
Another mistake is ignoring the timeframe. A doji on a five minute chart during a quiet afternoon is meaningless. A doji on a daily chart at a resistance level that has held three times is meaningful. Context comes from the timeframe and the price level, not the candle shape alone.
The practical takeaway.
Read the body first. Green or red. Then read the wicks. Where did the rejection happen? Then look at the sequence. Is this candle stronger or weaker than the one before it? That is the whole method. Everything else is detail.
Trading involves risk. No chart pattern guarantees a result. Candlesticks are a tool for reading price action, not a crystal ball. Use them with other tools like volume and support and resistance levels.
Prepared with AlphaScala editorial tooling, examples, and risk-context checks against our education standards. General education only, not personalized financial advice.