Reading Candlesticks
Why this matters
Candlesticks are how traders visualize price over time. Every dashboard, every chart on Trendwave, and every trade journal entry references price action shown as candles.
Once you can read a candle, you can read a chart. Once you can read a chart, you can start identifying patterns, trends, and key levels.
Open, High, Low, Close
Each candlestick represents a fixed period of time: one minute, one hour, one day. Within that period, four prices matter:
- Open: the price at the start of the period
- High: the highest price reached during the period
- Low: the lowest price reached during the period
- Close: the price at the end of the period
Anatomy of a candle
Body = open→close; wicks = high and low extremes.
Educational sketch — not a live signal
Bullish vs Bearish Candles
A bullish (green) candle means price closed higher than it opened. Buyers won that period.
A bearish (red) candle means price closed lower than it opened. Sellers won that period.
The size of the body tells you how decisive the move was. A long green body means strong buying. A tiny body (doji) means indecision.
- Green/white = close > open (bullish)
- Red/black = close < open (bearish)
- Long body = strong conviction, small body = hesitation
Bullish vs bearish
Color is convention: close above open vs close below open.
Educational sketch — not a live signal
Understanding Wicks
Wicks (also called shadows) show where price traveled but didn't stay. A long upper wick means buyers pushed price up, but sellers pushed it back down before the close.
Long lower wicks suggest sellers drove price down, but buyers stepped in and recovered before the period ended.
Wicks often mark rejection: a level where one side tried and failed.
- Upper wick = rejection from higher prices
- Lower wick = rejection from lower prices
- Long wicks at key levels can signal reversals
Candles and Timeframes
The same asset looks different on different timeframes. A red candle on the 1-minute chart might be a tiny wick inside a green daily candle.
Always know what timeframe you're looking at. A "big move" on the 5-minute chart might be noise on the daily.
We'll dive deeper into choosing timeframes in the next lesson. For now, just know that each candle's meaning depends on the period it represents.
Same price, different timeframes
Choppy 5m can be a clean 4H trend — always check context.
Educational sketch — not a live signal
Key Takeaways
Remember these points
- •Every candle shows Open, High, Low, and Close for one time period.
- •Green candles = buyers won the period. Red candles = sellers won.
- •Wicks reveal rejection and where price was tested but didn't hold.
- •Body size shows conviction; tiny bodies signal indecision.
- •Always note the timeframe. The same asset tells different stories on different scales.
Common Mistakes
Reading candles without checking the timeframe
A hammer on the 1m chart is not the same as a hammer on the daily. Context changes everything.
Ignoring wicks
Traders who only look at the body miss rejection signals. Wicks often mark the most important levels.
Treating one candle as a guaranteed signal
A single candle is a clue, not a verdict. Look for patterns and confluence across multiple candles.
Quiz
0/5 answered1.What does a long upper wick typically indicate?
2.A bullish candle means:
3.The "body" of a candlestick represents:
4.A very small body (doji) usually suggests:
5.OHLC stands for:
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