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How to Read a Candlestick

Reading a candle is turning its four prices into a sentence about what happened inside the period: how tall the body is, where the close sits in the range, and which wick is longer. This paper shows you three shapes with three stories, the three questions asked of one real candle, a real day where sellers pushed and were pushed back, the close measured as a number on a ruler, and where the four prices come from on your chart.

Difficulty
Beginner
Reading time
6 min
Pages
8
Reviewed by
Saman Rahbar

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Three stories

A candle is four prices, and reading it is turning the four into a sentence about what happened inside the period. A tall green body with the close near the top: buyers pushed the price up and it stayed up. A tall red body with the close near the bottom: sellers did the same downward. A small body with wicks both ways: both sides pushed, neither held, and the period ended near where it began. Every candle is one of these or something in between, and reading it is saying which.

Three questions

The sentence comes from three questions, asked in order. How tall is the body against the whole candle — did the period go somewhere and stay there, or travel and come back? Where does the close sit in the range — near the top, near the bottom, or in the middle? Which wick is longer — which side pushed and was pushed back? On 3 September 2026 the euro against the dollar had a body of 38.7 pips — a pip being the fourth decimal place — in a range of 57.7, a close 74 per cent of the way up, and an upper wick four times the lower. The answers describe the day; that is all they do.

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