Reading Candlestick Charts
Read candles, timeframes, support and resistance, and volume without overcomplicating it.
Every candle summarises the price action of one period — one minute, one hour, one day — in four numbers: open, high, low and close (OHLC).
Anatomy of a candle
- Body: from open to close. Green (or hollow) if close > open; red if close < open.
- Wicks (shadows): the high and low the price reached during the period.
- A long upper wick means buyers pushed up but sellers drove it back down — rejection of higher prices.
- A long lower wick means sellers pushed down but buyers absorbed it — rejection of lower prices.
Timeframes
The same market tells different stories on different timeframes. A sharp drop on the 5-minute chart may be a small pullback on the daily. Start from a higher timeframe to see the trend, then drop to a lower one to time an entry.
Support and resistance
Support is a price area where buying has repeatedly stopped declines; resistance is where selling has repeatedly capped rallies. They are zones, not exact lines. When a level breaks clearly, it often flips roles: old resistance becomes new support.
Volume
Volume shows how much traded in each candle. A breakout on strong volume is more convincing than one on thin volume. Big moves on low volume are easier to reverse.
Common patterns, honestly
- Engulfing candle: a candle whose body fully covers the previous one, hinting at a shift in control.
- Doji: open and close nearly equal — indecision.
- Higher highs and higher lows define an uptrend; lower highs and lower lows a downtrend.
Key takeaways
- Each candle shows open, high, low and close for one period; wicks show rejected prices.
- Read trend on a higher timeframe, time entries on a lower one.
- Support/resistance are zones; confirm breakouts with volume.