01The four prices: OHLC
A candle records four prices. The open is the first trade of the period, the high and low are the extremes reached, and the close is the final trade. Traders call this OHLC.
The thick part is the body: it spans open to close. The thin lines are wicks (or shadows): they reach up to the high and down to the low. When the close is above the open the candle is bullish (green); below the open it is bearish (red).
Drag the sliders above. Watch how the same high and low can tell completely different stories depending on where the session opened and closed.
02Bodies show conviction, wicks show rejection
- One side was in control from open to close
- Little disagreement about direction
- Often marks the start or continuation of a move
- Price explored far in both directions
- Neither side could hold its ground
- Signals indecision or a fight at a key level
A long lower wick means sellers pushed price down but buyers absorbed the selling and dragged it back up — the lows were rejected. A long upper wick is the mirror image: buyers were rejected at the highs.
03Five candles worth knowing
| Candle | What it looks like | What it tells you |
|---|---|---|
| Doji | Open ≈ close, wicks on both sides | Indecision; balance between buyers and sellers |
| Hammer | Small body at the top, lower wick ≥ 2× body | Sellers were rejected at the lows |
| Shooting star | Small body at the bottom, long upper wick | Buyers were rejected at the highs |
| Bullish engulfing | Green body fully covers the prior red body | Buyers overwhelmed the previous session |
| Marubozu | Big body, almost no wicks | One side dominated the entire session |
A hammer in the middle of nowhere means little. A hammer that rejects a major support level — ideally after sweeping the lows beneath it — means a lot. Always ask where a candle formed before asking what it is.
04Timeframes are nested
One 1-hour candle contains twelve 5-minute candles. A big green hourly candle can hide a violent dip in the middle — visible only on the lower timeframe. Professionals read the higher timeframe for direction and the lower timeframe for timing.
The close is the price everyone agreed on when the period ended, and it is the price that algorithms, settlement and indicators use. A wick through a level is an attempt; a close through it is a decision.
- OHLC = open, high, low, close — the four prices in every candle.
- The body spans open to close; wicks reach to the high and low.
- Long bodies show conviction; long wicks show rejection.
- A candle pattern only matters at a meaningful location.
- The close is the most important price of any period.
- Trading candle patterns without considering where they formed
- Treating a wick through a level as a confirmed break
- Reading a single low-timeframe candle without the higher-timeframe context
Candle Reader
Read six charts and candles. Score 70% or more to complete the lesson.