A candlestick condenses a full period of trading (one minute, one hour, one day) into a single shape. It shows you where price opened, where it closed, and the extreme high and low it touched in between. This lets you see not just the direction of a move, but also the struggle between buyers and sellers during that period. The shape itself tells you whether bulls or bears had control.
- Body
- The thick rectangular section between open and close price, colored green (up) or red (down).
- Wicks or shadows
- The thin lines extending above and below the body, showing the high and low price touched.
- Open and close
- The top and bottom edges of the body, marking where the period started and ended.
Green candle with small lower wick: buyers in control, sellers rejected.
Red candle with small upper wick: sellers in control, buyers rejected.
A single candlestick tells you what happened, not what will happen next. A green candle can be followed by a sharp reversal. Traders often over-read isolated candles and miss the larger pattern. The desk always reads candles in context of the surrounding structure, never in isolation.
This is the foundation of every chart we read at the desk, and the language we use to describe price action to clients.