The lesson in full
Every price chart is built from one shape: the candle. Each one sums up a single period, like a day or a week, as a tug-of-war between buyers and sellers.
A green candle means buyers won that period: the price closed higher than it opened.
A red candle means sellers won: the price closed lower than it opened.
The thin lines are wicks: the highest and lowest prices reached. Add the open and close and you get four prices in one candle, called OHLC.
Line up lots of candles and you can see where price has been heading. A run of mostly green candles climbing higher is an uptrend.
- Common mistake
Myth: “a big green candle means price will keep rising.” A candle shows what already happened, not what comes next.
- Key takeaway
Body = open to close. Wicks = the extremes. Colour = who won the period.
Quick check
- A daily candle opens at 100 and closes at 104. What colour is it? Green, because it closed above the openClose above open means buyers won the period, and most charts draw that in green.
- A long upper wick tells you that price... Rose higher but couldn't hold thereA wick marks a price that was reached but not held until the close.
- A weekly candle shows... One week of tradingEach candle covers exactly one unit of the chart's timeframe, here one week.
- How many prices does one candle show? Four: open, high, low and closeThe body shows open and close; the wicks show the high and low. That's OHLC.
Words in this lesson
Reading Charts
- What is a candle, really?
- Line, bar and candle charts
- Trends: the walk of price
- Floors and ceilings
- Breakouts and fakeouts
- Timeframes: zoom in, zoom out
- Three candle patterns worth knowing
- Moving averages
- Momentum and the RSI
- Volume: how many voted