🕯 How to Understand Candlestick Charts in Detail

Candlestick charts are a visual map of price movement.

Each candle provides you with four vital pieces of information about the market over a specific time period (such as one minute, hour, day).


This is what each candle reveals to you:



🧠 Anatomy of the Candlestick


Each candle contains:


  • Opening Price (Open): the price at the beginning of the time period


  • Highest Price (High): the highest point the price reached during the period


  • Lowest Price (Low): the lowest point the price reached during the period


  • Closing Price (Close): the price at the end of the time period




Candle shape:


  • The body (the thick part) represents the distance between the opening price and the closing price.


  • The shadow (the thin line above and below the body) represents the highest and lowest prices during the period.




Part What does it mean? 🟥 Red candle Closing price is less than opening price (Bearish candle) 🟩 Green candle Closing price is higher than opening price (Bullish candle) Upper wick Indicates how far buyers pushed the price up before sellers took control Lower wick Indicates how far sellers pushed the price down before buyers returned

📚 Basic Concepts to Understand


1. The size of the candle matters


  • Large body and small wicks = Strong momentum (bullish or bearish).


  • Small body and long wicks = Indecision in the market (the trend may reverse or continue).




2. The length of the wick tells the story


  • Long upper wick = Buyers were strong but sellers prevailed → Potential bearish reversal.


  • Long lower wick = Sellers were strong but buyers prevailed → Potential bullish reversal.




3. The sequence of candles is more important than the individual candle


  • One candle = One word.


  • Series of candles = A complete sentence.


  • Therefore, judge the candles in context and not individually.





📈 Candle Patterns You Should Know


Pattern Meaning Doji Indecision — may precede a reversal or continuation Hammer Bullish reversal — buyers regained control Shooting Star Bearish reversal — sellers regained control Bullish Engulfing Strong signal for bullish reversal Bearish Engulfing Strong signal for bearish reversal Morning Star / Evening Star Strong reversal patterns made up of three candles

(Would you like me to also create a diagram for these patterns? 🎨)



🛡 How to Read Candlesticks Professionally


✅ Start with the larger zoom out:

Analyze the larger time frame (like daily or four-hour) to understand the overall trend before focusing on smaller frames (like hourly or 15 minutes).


✅ Identify support and resistance areas:

Watch how the candles behave at these levels — they are keys to the next movement.


✅ Wait for confirmation:

Do not rely on a single candle.

Look for patterns + confirmation from volume or other indicators.


✅ Combine candles with technical indicators:

Candles tell the story, and indicators (like RSI or moving averages) provide additional clues.


✅ Practice consistently:

Understanding candles becomes easier with daily practice — even if you are not trading.



🔥 Quick Summary:

Candlesticks = The language of the market.

Each candle tells a story about the struggle between buyers and sellers, strength versus weakness, fear versus greed — you just need to learn to read this story correctly.


Your task as a trader:


  • Don't just memorize the shapes — understand the meaning behind them.


  • Connect the position of the candle (in the trend or at support/resistance) + the visible pattern + volume together to make the right decision.