Candlestick
A candlestick is a chart shape that shows a share’s opening, highest, lowest and closing price for one period, such as a day.
What it is
Each candle on a daily chart is one trading day. The thick part, the body, runs from the opening price to the closing price. The thin lines above and below, called wicks or shadows, show the highest and lowest prices of the day.
If the close is above the open, the candle is usually drawn green (or hollow): buyers won the day. If the close is below the open, it is drawn red (or filled): sellers won.
How to read it
A long body means price moved a lot from open to close, showing strong conviction. A small body means open and close were close together, showing indecision.
Long wicks show rejection. A long lower wick means sellers pushed the price down during the day but buyers pushed it back up before the close. A long upper wick means buyers tried to push higher but sellers took over.
One candle tells you about one day. Groups of candles, read at important levels like support and resistance, say more than any single candle.
Limits
Candle patterns with names, like the hammer or the engulfing pattern, describe what happened. They do not guarantee what happens next. Many fail, especially in the middle of a range with no clear level nearby.
Always check the trend and volume. A strong-looking candle on very low volume carries less weight.
Reading one daily candle
A share opens at ₹240, falls to ₹228 during the day, rises to ₹252 later and closes at ₹250. The candle is green with a body from ₹240 to ₹250. The lower wick reaches ₹228 and the upper wick ₹252. Sellers tried early, but buyers controlled the close.
Common mistakes
- Trading on one candle pattern without looking at the trend or the level it formed at.
- Ignoring the wicks, which often tell the more important story.
- Comparing candles across timeframes without realising each candle covers a different period.
A candle has a small body near the top and a long lower wick. What does it show?
- Sellers pushed price down, but buyers pushed it back up before the close
- Price closed at the low of the day
- Nobody traded that day
Show the answer
Sellers pushed price down, but buyers pushed it back up before the close. The long lower wick shows prices were rejected lower down. The close near the high means buyers recovered the ground by the end of the day.
Common questions
What do green and red candles mean?
Green usually means the close was above the open for that period. Red means the close was below the open. Colours can be changed in most charting apps.
What is a wick in a candlestick?
The thin line above or below the body. It shows the highest and lowest prices reached during the period.
Are candlestick patterns reliable?
They are useful for reading who was in control, but no pattern works every time. They work better with trend, volume and key price levels.
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