How to Read Candlestick Charts

A candlestick turns four numbers — a period's open, high, low and close — into a single shape you can read at a glance. Learn the anatomy once and every crypto chart becomes legible.

The anatomy of a candle

• The body is the thick part: it spans the open and close prices.
  • Green (or white) — the candle closed higher than it opened (buyers won).
  • Red (or black) — it closed lower than it opened (sellers won).
• The wicks (or shadows) are the thin lines above and below the body: the top wick is the period's high, the bottom wick its low.

So one candle tells you where price started, where it ended, and the extremes it touched in between.

What a candle is telling you

• A long body means one side dominated the whole period — strong conviction.
• A small body with long wicks means a tug-of-war: price ranged widely but closed near where it started — indecision.
• A long lower wick means a dip was bought back (rejection of lower prices); a long upper wick means a rally was sold into.

Common patterns worth knowing

Patterns are probabilities, not promises:

• Doji — open and close almost equal; indecision, often near turning points.
• Hammer — small body, long lower wick; sellers tried to push down and failed, a potential bullish sign after a drop.
• Engulfing — a candle whose body fully covers the previous one; a momentum shift in the engulfing candle's direction.

Treat a pattern as a hint to look closer, confirmed by where it appears (e.g. at support or resistance), not a standalone trade.

Timeframes

Each candle represents one slice of time — a minute, an hour, a day — set by the chart's timeframe. The same market looks calm on the daily and frantic on the 1-minute. Higher timeframes carry more weight, because more traders and more money formed them.

Next, layer on momentum: What is RSI?, and keep risk management in mind on every trade.