Reading Candlestick Charts

Candlestick charts are the most popular charting method among traders. Each candle tells a story about price action.

Anatomy of a Candlestick

Each candle shows:

Open: Starting price
Close: Ending price
High: Highest price reached
Low: Lowest price reached

Body

The filled/colored portion between open and close

Wicks (Shadows)

Thin lines above/below the body showing high/low

Bullish vs Bearish Candles

Bullish (Green/White):

Close is higher than open
Indicates buying pressure

Bearish (Red/Black):

Close is lower than open
Indicates selling pressure

Key Candlestick Patterns

Single Candle Patterns

Doji: Open equals close, shows indecision Hammer: Small body, long lower wick - potential reversal up Shooting Star: Small body, long upper wick - potential reversal down Marubozu: Full body, no wicks - strong momentum

Multi-Candle Patterns

Engulfing: Second candle completely covers first Three White Soldiers: Three bullish candles in a row Three Black Crows: Three bearish candles in a row

How to Use

Look for patterns at key support/resistance
Confirm with other indicators
Higher timeframes = more reliable signals
Always wait for candle close before acting