Candlestick
In simple terms
A candlestick is a visual tool that shows you the price movement of an asset over a set time period, like an hour or a day. The thick part shows the opening and closing prices, while the thin lines show the highest and lowest prices reached during that time.
Definition
A chart element showing open, close, high, and low prices for a time period.
In depth
A candlestick is a composite price visualization that displays four key data points—the opening price (where trading began), closing price (where it ended), high (peak price reached), and low (floor price reached)—for a defined time interval. The rectangular body, or 'real body,' represents the open-close range and is colored to indicate direction: typically green or white for bullish periods (close above open) and red or black for bearish periods (close below open). The thin extensions, called 'wicks' or 'shadows,' extend from the body to mark the high and low extremes, enabling traders to quickly assess volatility, momentum, and price action patterns within the interval.
How does Candlestick work?
Each candlestick encodes four numbers for one period: open, high, low and close. The rectangular body spans the open and close, while the thin wicks above and below reach the period's high and low. Convention colors the body one way when the close is above the open and another when it is below, so direction is visible at a glance. A long body means price moved far and finished near an extreme; a long wick means price reached that far and was pushed back before the period ended. Named patterns such as doji or engulfing are simply combinations of these shapes across consecutive periods.
An example
Illustrative figures: a daily candle opens at $200, trades as high as $240, falls to $190, and closes at $205. The body is a short one between $200 and $205, colored as an up period, with a long upper wick reaching $240 and a shorter lower wick at $190. A reader would note that price traded forty dollars above the open during the session but almost none of that held into the close.
Figures are illustrative only.
What beginners get wrong
- A candle is not final until its period closes, so acting on the shape of a candle still forming means reading an unfinished number.
- Single-candle patterns carry little information alone, and named shapes such as hammers appear constantly on any chart without meaning much.
- Color conventions and the session boundary an exchange chooses both differ, so the same market can produce different-looking daily candles on two platforms.
- Confusing a wick with a body leads people to believe price closed at an extreme when it was actually rejected there.
Related terms
Part of
What is technical analysis, and how are crypto charts read? — the subject page for technical analysis, with all 29 of its definitions in one place.
Educational only — not financial advice.