Reading Markets · Candlesticks and Timeframes
Candlestick Anatomy: Open, High, Low, Close
What You'll Learn
- What the four numbers behind every candlestick represent
- How to read a candle's body and wicks
- What color typically tells you about a candle
The Big Idea
Welcome to Reading Markets. I want to start with the single most important visual tool in trading: the candlestick. A single candlestick packs four numbers — the open, high, low and close, often shortened to OHLC — for a specific period into one simple shape, letting you read a huge amount about price behavior at a glance.
Let's Break It Down
The open is the price when the period started. The close is the price when it ended. The high and low are the highest and lowest prices reached at any point during that period, even if price did not end there. Together, these four numbers are what "OHLC" refers to.
Visually, a candle has a thicker body, spanning from the open to the close, and thinner lines above and below it called wicks, or shadows, reaching up to the high and down to the low. The body shows where price mostly settled. The wicks show how far it reached before pulling back.
Color is typically used to show direction at a glance. One color, often green, means the close was higher than the open — price rose over that period. The other color, often red, means the close was lower than the open — price fell. The exact colors can vary by platform, but the underlying logic stays consistent.
Real Example
Picture a candle with a small body but a very long wick on top. This tells a specific story: price pushed up significantly during the period, but sellers pushed it back down before the period ended. The wick preserves that high point, even though the close settled much lower.
Why It Matters
I want you to become fluent in candlesticks, because they are the basic visual language nearly every price chart is built from. Every other concept in this course — trends, support, resistance, patterns — gets read directly off sequences of candles.
Common Mistake
A common mistake is only looking at a candle's color and ignoring its wicks. The body tells you where price settled, but the wicks often carry just as much information about how much price actually moved during that period before it settled.
Quick Check
What does the wick (shadow) of a candlestick represent?
Key Takeaways
- A candlestick represents four numbers for a period: open, high, low and close (OHLC).
- The body spans open to close; the wicks show the full high-to-low range reached during the period.
- Color typically shows direction — whether the close was higher or lower than the open.
Finished reading?
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