How do Candlestick Charts Work?

A candlestick summarizes one trading period — say, a day — as a single shape built from four prices: open, close, high, and low. The thick body stretches from open to close; the thin wicks reach to the high and low. Color shows direction: green when the close beat the open, red when it didn't.

The anatomy carries the story. A long solid body means one side controlled the session start to finish, while a long lower wick means sellers drove price down and buyers slammed it back before the close, and a long upper wick is the mirror image, a rally that got rejected. A tiny body with wicks both ways, called a doji, is a standoff: lots of motion, no winner. Named patterns are these shapes with labels, such as a hammer, a long lower wick after a decline that hints sellers are exhausted. One detail changes the weight of all of them: a candle can cover a minute, a day, or a month, and the same shape means far more on a monthly chart because it summarizes far more trading. Two cautions keep the tool honest: a pattern is a probability nudge rather than a promise, and traders read the sequence instead of any single shape.

Each candle is a boxing round on the judges' scorecard. Where the fighters started and where the round ended — that's the body; the wildest moments in between, the knockdown that got answered before the bell — those are the wicks. One card tells you who won the round and how, and the stack of cards tells you how the fight is going.