Alphawick

Candlestick Chart

beginnerFundamental•1 min read

Quick Answer

A chart type displaying the open, high, low, and close prices for each time period as a 'candle' shape.

Anatomy of a Candlestick

Candlestick chart example
Understanding candlestick anatomy

Each candlestick represents price action for a specific time period and shows four key data points:

Open - The first traded price of the period High - The highest price reached during the period Low - The lowest price reached during the period Close - The last traded price of the period

The thick part (body) shows the range between open and close. The thin lines (wicks/shadows) show the high and low.

Reading Colors

Note

Bullish Candles (Green/White) The close is higher than the open. The bottom of the body is the open, and the top is the close. This indicates buying pressure during the period.

Warning

Bearish Candles (Red/Black) The close is lower than the open. The top of the body is the open, and the bottom is the close. This indicates selling pressure during the period.

Common Patterns

Doji - Open and close are nearly equal, showing indecision Hammer - Small body at top with long lower wick, bullish reversal signal Shooting Star - Small body at bottom with long upper wick, bearish reversal signal Engulfing - Large candle that completely covers the previous candle's body

Pro Tip

Look for these patterns at key supportsupport and resistance for the highest probability trades.

Real-World Example

A large bullish engulfing candlestick pattern at a support level often signals strong buying pressure and potential trend reversal.

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