Reading candles
The parts of a candle
A candle records where a period opened, how high and low it went, and where it closed.
Definition
How the thing is defined. There is nothing to test.
Definitions only.
What it is
The body runs from open to close. The thin lines above and below are the wicks, ending at the period's high and low. A close above the open is a rising candle and a close below is a falling one; the colors are a platform setting.
What it suggests
A long body means price moved a long way and stayed near the end of that move. A long wick means price went there and was pushed back before the period ended.
How to check it
Look at three things: how big the body is against the whole range, which wick is long, and where the close sits inside the range.
Common mistakes
- Treating color as the signal when the body and wicks carry the information.
Related lessons
Written in our own words. Education only, not financial advice.