Candlestick charts

The candlestick is the most popular chart type in the world. Born in 18th-century Japanese rice markets, it shows the same Open, High, Low and Close as a bar — but in a far more visual way.

Anatomy of a candle

• The body is the rectangle between the open and close.
• The wicks (or shadows) are the thin lines above and below, reaching to the high and low.
• Colour shows direction. Conventionally a candle that closed above its open is bullish (often green or white); one that closed below its open is bearish (often red or black).

Reading the message

A candle tells a story of the battle within the period:

• A long body = strong, one-sided movement.
• A small body = indecision; open and close finished close together.
• A long lower wick = price was pushed down but buyers fought it back up.
• A long upper wick = price was pushed up but sellers knocked it back down.

Why it dominates

The coloured body makes trend and momentum jump off the screen, and the wicks expose the fight that a line chart hides entirely. A whole later chapter is devoted to specific candlestick patterns — but every one of them is just a reading of these bodies and wicks. Master the anatomy first.