How to Read a Candlestick Chart: Four Prices, Body and Wicks

Four prices in one candle

Each candle on a candlestick chart boils the trading of a fixed period down to four prices. The first trade after the period begins sets the open, the highest traded price is the high, the lowest traded price is the low, and the last trade is the close. From their initials, the four are also called OHLC. On a daily chart one candle covers a day, and on a 1-hour chart it covers an hour; how to choose that length is the subject of the next article, on timeframes. Most indicators you add to a chart are values recalculated by feeding these four prices (mainly the close) and volume into a formula. The close is used so heavily because it is the last price that everyone trading in that period agreed on, and it becomes the starting point for the next candle. The high and the low, by contrast, can be set by one or two trades in a brief moment. When a single large order sweeps through several price levels at a thin time of day, it leaves a long wick tip behind. So rather than giving the four values equal weight, it is safer to center your reading on the close and treat the high and low as the range price touched during that period.

What the body and wicks tell you

The thick rectangle drawn between the open and the close is the body, and the thin lines that stretch above and below it to the high and the low are the wicks (also called shadows). A long body means the price at the start and the price at the end of the period were far apart; almost no body means that, however far price traveled, it finished near where it started. A long upper wick means price climbed high at some point and was pushed back down by the close, and a long lower wick means it dropped low at some point and came back up. A candle shows you how far price went and where it ended, and on the Candlestick Pattern Scanner you can watch shapes like these form and disappear with every 1-minute candle. Many people read a wick as a sign that there were plenty of opposing orders at that price, but to read it that way you need to look at where the wick formed and at volume as well. Wicks of the same length carry different weight depending on whether they are much longer than the average range of recent candles, whether they formed near a prior high or low, and whether volume was heavier than usual. The basic rule is to judge body and wick lengths against the surrounding candles, not in absolute terms.

• Body = |close − open|
• Upper wick = high − the larger of open and close
• Lower wick = the smaller of open and close − low
• Candle range = high − low

Bullish, bearish and color conventions

A candle that closes above its open is called a bullish (up) candle, and one that closes below its open a bearish (down) candle. Color conventions differ from country to country. US and European charts, along with global exchanges such as Binance, usually color bullish candles green and bearish candles red, while Korean brokerage and exchange charts generally paint bullish candles red and bearish candles blue. Forget that difference when you look at charts from another country and you will read red exactly backwards. The figures in this course are drawn in green and red on the English and Japanese pages and in red and blue on the Korean pages, so the text refers to candles as bullish or bearish instead of by color. The crypto tools on this site vary from tool to tool: some, like the Multi-Timeframe Trend Matrix, switch colors by language, while others, like the Pro Trading Chart, always use green and red. Bullish and bearish compare only the candle's own open and close, so a candle that finishes below the previous close is still bullish if price rose within it. In stocks, a day that opens with a gap down and recovers somewhat during the session prints a bullish candle even though the price fell from the day before, so it is better not to treat 'up today' and 'bullish candle' as the same thing.

A candle cannot tell you the order inside it

A candle keeps only four values and erases the path between them. That is why you cannot tell from a single candle whether the high or the low came first. The single 1-hour candle in the figure below can be built just as well from four 15-minute candles that first rallied hard, slipped back and then rose again, as from four 15-minute candles that first fell and then climbed. If a stop-loss order and a take-profit order both sat inside this candle's range, the candle also cannot tell you which of them filled first. To learn the order you have to open shorter candles, and how a backtest treats candles like this can change its results. When a backtest program meets a candle like this, it usually applies a fixed rule. Some assume conservatively that the stop was hit first, others fill the favorable side first, and the latter makes results look better than reality. If many trades in a record were opened and closed inside a single wide candle, it is worth checking them again with shorter-candle data.

When does a daily candle end?

A daily candle may be 'one day', but where that day is cut depends on the exchange and the chart settings. Binance's daily candle rolls over at 00:00 UTC, so in Korea a new candle starts at 9 a.m. Korean exchanges differ: some cut at 9 a.m. like Binance, and others cut at midnight Korea time. Two daily candles with the same date that cover windows nine hours apart will have different opens and closes, and if a big move happened in between, one can end up bullish and the other bearish. When you compare charts or talk about 'yesterday's daily candle', first make sure you mean the same exchange and the same cutoff time. For stocks, candles usually include only regular-session hours. A Korean stock's daily candle is built from trading between the 9 a.m. open and the 3:30 p.m. close, and a US stock's daily candle from the regular session between 9:30 a.m. and 4 p.m. New York time; pre-market and after-hours trading is included or left out depending on the chart settings. If the daily high or low of the same stock differs slightly from site to site, this setting is the first thing to suspect.

Gaps are rare in a 24-hour market

The stock market closes and reopens the next day, so overnight news can make a stock open well below the previous day's close. An empty price range between two candles, where no trading took place, is called a gap. Crypto spot markets trade 24 hours a day with no weekends, so a new candle opens almost exactly where the previous candle closed, and gaps appear only in rare cases, such as when trading was halted for exchange maintenance. As a result, candlestick patterns from stock textbooks that require a gap have to be redefined for crypto charts, a problem the article on two- and three-candle patterns in Part 4 returns to. A stock gap forms when orders that piled up overnight are reflected in the open all at once. The Korean market sets the open through a call auction that collects orders for 30 minutes before the open and fills them at a single price, so the first candle's open is itself a summary of the overnight news. In crypto, momentary price differences do arise between exchanges, but they rarely remain as empty space between candles. Conversely, if a sudden gap appears on a crypto chart, the first things to check are missing data or a trading halt.

Heikin-Ashi is not the real price

Heikin-Ashi redraws candles using averages. In place of the close it uses the average of the candle's four prices, (open + high + low + close) ÷ 4; in place of the open it uses the average of the previous Heikin-Ashi candle's open and close; and for the high and low it takes the highest and the lowest of the actual high, the actual low and these two values. Because of the averaging, candles of the same direction line up in long runs and the trend looks smooth, but the open and close shown on screen are not prices that actually traded. In tools that let you turn Heikin-Ashi on, such as the Pro Trading Chart, switch back to regular candles before you work out an entry or stop-loss price. Because each Heikin-Ashi candle carries over values from the one before it, the first few candles differ slightly depending on where the chart's data begins. And because an average sits in place of the close, candles in the same direction often keep coming for one or two more bars after the real price has already turned. It is best to use it knowing that the smoother view comes at the cost of slower reactions.

Common misconception: a long wick means a reversal

When you see a candle with a long lower wick, it is tempting to read it as 'buyers stepped in hard at the bottom, so price will rise now'. But all the wick actually tells you is that, during that period, price reached that level and came back. When this course measured it directly on 29,946 daily candles of 10 coins on Binance (August 2017 to September 2026), the 756 hammers (a small body with a long lower wick) that appeared after a decline closed higher 5 candles later 51.5% of the time, almost the same as the 50.5% baseline for all candles, and 20 candles later (752 cases) the figure was 49.2%, slightly below the 50.4% baseline. Pattern names are easy to attach to past charts, but that is a different thing from calling moves in advance; the detailed numbers are in the single-candle patterns article in Part 4. In the Chart Prediction Quiz you can use real charts with the coin name and dates hidden to check whether your calls beat the random-guess baseline. That is why many people, instead of judging from the wick alone, also watch whether the following candles hold the price at the tip of the wick.

How candles look different in crypto and stocks

The same candle takes on a different shape when the market's rules differ. The first difference is price limits. Korean stocks such as Samsung Electronics and SK hynix can move at most 30% up or down from the previous close in a day, so on a day that hits the upper or lower limit, the body or wick stops as if it had been cut off at that line. US stocks have no daily limit on individual names but do have mechanisms that pause trading briefly during sharp moves, and crypto has no limit at all, so a single candle can move tens of percent. The second is the nature of volume. Stock volume is usually aggregated for the market where the stock is listed, whereas crypto volume belongs only to the one exchange whose chart you are looking at, so the same coin can show very different volume from exchange to exchange. The third is volatility. A wick that looks long on a daily candle of a US index or a large tech stock may be an ordinary size on a Bitcoin daily candle, so wick length has to be compared with the same asset's recent candles. Finally, the open of a stock's daily candle has passed through a call auction and possibly a gap, while a crypto daily open is a continuation of the previous close, so the same 'close versus open' calculation covers a different stretch of time.

Reading candles on a live chart

The rightmost candle on a live chart has not finished yet. Its close is simply the current price, and its high and low can still widen at any point in the time that remains. It is common for a 1-hour candle that looked like a hammer with a long lower wick ten minutes earlier to turn into a long bearish candle after a sharp drop just before the close. So when you talk about a candle shape or an indicator signal, first settle whether you mean closed candles or the candle still in progress. Moving averages and RSI calculated on the live candle are recalculated every time the price changes, so a signal that appeared on screen can vanish when the candle closes. That is also why this site's buy and sell signal summary tool measures past performance on closed candles only. Keep an eye on how much time is left until the candle closes; the more time remains, the more provisional the current shape is.

A practical checklist

Fixing an order for reading a candle reduces how much your judgment wobbles each time you look at the same chart. The steps below are not rules that hand you a conclusion; they collect the checks that are easy to skip.

• Confirm which exchange or market and which candle length you are looking at, and what time the day is cut at
• Check whether the rightmost candle is closed or still in progress, and how long until it closes
• Compare the body and wick lengths with the average range of roughly the last 20 candles
• See whether the wick formed near a prior high or low or a heavily traded price zone
• Check whether volume was heavier than usual and whether other exchanges show the same shape
• Make sure the chart settings are not showing Heikin-Ashi or mixing in pre-market and after-hours trading
• For stocks, check for gaps and price limits; for crypto, check for exchange maintenance or missing data