Candlestick Anatomy and What Each Candle Tells You
Every candlestick is a compressed story of the battle between buyers and sellers during a specific time period. Learning to read that story is the foundation of price action trading.
The Four Data Points
Every candlestick contains four pieces of information: the open, high, low, and close. From these four numbers, you can reconstruct the entire narrative of that period — where price started, how far buyers pushed it up, how far sellers pushed it down, and where it ultimately settled.
The Body
The body of the candle (the thick part) represents the range between the open and close. A bullish (green) candle closes above its open — buyers won the period. A bearish (red) candle closes below its open — sellers won. A large body relative to the candle range indicates strong conviction in one direction.
The Wicks (Shadows)
Wicks represent rejection. An upper wick shows that price attempted to go higher but was pushed back down before the close — seller rejection of higher prices. A lower wick shows that price attempted to go lower but was pushed back up — buyer rejection of lower prices.
Long wicks at key levels are among the most reliable price action signals. A long lower wick at support tells you: sellers tried to push price lower, buyers aggressively rejected that attempt. This is the definition of buying pressure at a key level.
Doji Candles
A doji has virtually no body — open and close are at or near the same price. This represents indecision: neither buyers nor sellers won the period. Doji candles at extremes (after a long trend or at a key level) carry more significance than dojis mid-trend.
Reading Candles in Context
A candlestick in isolation is meaningless. Its meaning comes from its location — at support or resistance, after a trend, at a Fibonacci level. The same pin bar (long lower wick) is bullish at support and potentially irrelevant mid-range. Context is everything.