How to read candlestick charts
Open, high, low and close: what every candle tells you, and the few patterns worth knowing.
A candlestick shows four prices for one period of time (one minute, one hour, one day and so on): where price opened, the highest and lowest prices traded, and where it closed.
The body and the wicks
The thick part is the body, the distance between the open and the close. On Greenback Terminal a green body means price closed higher than it opened (buyers won the period), and a red body means it closed lower (sellers won). The thin lines above and below are the wicks (or shadows); they show how far price travelled before being pushed back.
What the shape tells you
- Long body, small wicks: one side was in control the whole period. Strong momentum.
- Small body, long wicks: indecision. Buyers and sellers both tried and neither won.
- Long upper wick: price was pushed up and then sold. Often seen near resistance.
- Long lower wick: price was pushed down and then bought. Often seen near support.
Three patterns worth knowing
Pin bar (hammer / shooting star): a small body with one wick at least twice its size. A hammer at support suggests buyers are stepping in; a shooting star at resistance suggests sellers are.
Engulfing: a candle whose body completely covers the previous candle's body in the opposite direction. A bullish engulfing after a fall can mark a turn.
Doji: open and close almost equal. On its own it means little; after a long trend it warns that momentum is fading.
The most important rule
A pattern only matters where it appears. A hammer in the middle of nowhere is noise; a hammer at a well-tested support level, in an uptrend, is a signal worth acting on. Always read candles in the context of trend and key levels.
Educational content only, not financial advice. Trading involves risk of loss.