How to read a candlestick chart
A candlestick chart summarises price movement over a time period such as a day. It is a way of seeing four numbers at once. This page is educational and not advice to buy or sell anything.
One candle, four numbers
Each candle has open, high, low and close prices. The thick body spans open to close. The thin lines (wicks) reach the high and the low. A green candle usually means the close was higher than the open; red means lower.
Common shapes
A doji has almost no body: open and close were nearly equal. A hammer has a small body and a long lower wick: price fell, then recovered within the period. An engulfing pattern is when one candle’s body fully covers the previous one’s body.
Use with care
A single shape does not predict the future. Candles describe what already happened. Learning to read them helps you understand price history, nothing more.
Related guides
- SMA, RSI and MACD in plain words
- Why a trading journal helps and what to record
- Paper trading: practise with virtual money
General information for learning. It is not financial, tax, legal or investment advice.