Anatomy of a Candlestick

What a Candlestick Encodes

Every bar on a candlestick chart represents exactly one time period: one minute, one day, one week, depending on your chart settings. Inside that bar are four numbers: the price when the period opened, the highest price reached, the lowest price reached, and the price when the period closed. These are the OHLC values: Open, High, Low, Close.

The candlestick is a visual compression of those four numbers into a single shape. Once you can read the shape, you don’t need to look up the numbers; they’re already visible in the geometry.

The Four Prices

Open is the first trade of the period. For daily charts, this is typically near the previous day’s close, though gaps do occur, especially around earnings or news events.

Close is the last trade of the period. For technical traders, this is often the most important of the four prices. Many indicators and pattern definitions are close-based, because the close reflects where the market “decided” to end the session.

High is the highest price any trade occurred during the period. It represents the furthest point buyers pushed the price before sellers pushed back, or before the period ended.

Low is the lowest price any trade occurred. It represents the furthest point sellers pushed price before buyers stepped in.

Body and Wicks

The rectangular section in the middle of the candle is called the body. It spans from Open to Close, regardless of which is higher. The color tells you which was higher: a green (or hollow) body means Close was above Open: the period ended higher than it started. A red (or filled) body means Close was below Open.

The thin lines extending above and below the body are the wicks, also called shadows. The upper wick runs from the top of the body to the High. The lower wick runs from the bottom of the body to the Low. If Close equals High, meaning price never retreated from its peak, there is no upper wick.

What the Shape Tells You

The relative sizes of body and wicks carry information about the session’s character.

A long body with short wicks suggests conviction. Buyers (or sellers) were in control throughout most of the period with little resistance from the other side. Price moved strongly in one direction and stayed there.

A small body with long wicks suggests indecision or a struggle that ended without a clear winner. Both sides pushed hard, high wick = buyers tried and failed, low wick = sellers tried and failed, and the period ended near where it started.

A long upper wick specifically means: buyers drove price significantly higher during the period, but sellers pushed it back down before the close. The effort failed. This is often a warning sign for bulls: it suggests supply overhead.

A long lower wick means the opposite: sellers drove price lower, but buyers absorbed that selling and pushed the price back up. The bears failed. This is often a sign of support: demand emerged at lower prices.

What Color Actually Means (and What It Doesn’t)

Green means the close was above the open. Red means the close was below the open. That’s it: it’s a binary comparison of just two of the four prices.

Color doesn’t tell you whether the period was “good” or “bad” in a larger sense. A red candle that closes higher than the prior day’s close is still a red candle. A green candle that barely closes above its open, even while covering significant ground on the downside intraday, is still a green candle.

Color also says nothing about magnitude unless the body is also large. A one-tick green candle and a massive bullish engulfing candle are both green. The body size is what carries the information about force.

This is why reading wicks alongside color matters. A large red body with almost no wicks tells a different story than a red candle with a long lower wick. The first says sellers dominated start to finish. The second says sellers tried, buyers pushed back hard, and the close was still below the open: a mixed session with interesting dynamics.

Practical Implications

When scanning charts, train yourself to read candles as sentences, not just colors. Ask: where did the period end relative to where it started (body), and where did price reach that it couldn’t hold (wicks)?

A cluster of candles with consistently long upper wicks near the same price level suggests resistance: sellers are consistently showing up at that level. A cluster with long lower wicks suggests support: buyers keep defending that zone.

These observations don’t give you certainty. They give you context for what subsequent price action might mean.

Common Misconceptions

“A green candle means price went up.” Not necessarily. A green candle means the close was above the open for that specific time period. If the prior close was higher, you could have a green candle on a down day.

“Red candles are bad.” In a downtrend you’d expect red candles. What matters is context: where the candle forms, what precedes it, what the wicks look like, and how it fits into the pattern around it.

“Wicks are noise.” This is one of the more costly misreads. Wicks show you where price went and failed to hold. They represent real trades, real pressure, and often real information about where participants are active. A string of long upper wicks near resistance isn’t noise: it’s a signal.

“The close is what matters, not the wicks.” The close matters most for many indicators, but the wicks tell you about the path. Two candles with identical opens and closes can have very different stories depending on their wick structure.

Key Takeaways

• Each candlestick encodes four prices: Open, High, Low, and Close. All are readable directly from the candle’s shape.
• The body spans Open to Close; color shows which was higher (green = close above open, red = close below open).
• Upper wicks show rejected highs; lower wicks show rejected lows; both carry information about where the opposing side pushed back.
• A long upper wick near resistance is a bearish signal; a long lower wick near support is a bullish signal.
• Color is binary, not a measure of magnitude; body size and wick length carry the force of the move.