Candlesticks & Timeframes

Part 1: What is a Candlestick?

The Basic Idea

A candlestick is a visual representation of price movement during a specific period of time.

Think of it like a summary box that answers four questions:

• Where did the price start? (Open)
• What was the highest price reached? (High)
• What was the lowest price reached? (Low)
• Where did the price end? (Close)

These four prices—Open, High, Low, Close—are often called "OHLC" for short.

Why Candlesticks Instead of Just a Line?

A simple line chart only shows closing prices. But candlesticks show you much more information:

• They show you the range of price movement
• They show you who won the battle (buyers or sellers)
• They reveal market emotion (confidence, fear, indecision)

This extra information helps you make better trading decisions.

Part 2: Candlestick Anatomy (The Four Key Prices)

Let's break down a candlestick piece by piece.

The Body (The Thick Part)

The body is the thick, rectangular part of the candle. It shows the distance between the Open and the Close.

• Top of the body = the higher price between Open and Close
• Bottom of the body = the lower price between Open and Close
• Size of the body = how much the price moved between open and close

The Wicks (The Thin Lines)

The wicks (also called shadows or tails) are the thin lines above and below the body.

• Upper wick = shows the High (the highest price reached)
• Lower wick = shows the Low (the lowest price reached)

What wicks tell you:

• Long upper wick = buyers pushed price up, but sellers pushed it back down (rejection at the top)
• Long lower wick = sellers pushed price down, but buyers pushed it back up (rejection at the bottom)
• No wicks = price opened or closed at the extreme (very strong movement)

Part 3: Color Coding (Green vs. Red Candles)

Green (or White) Candles = Bullish

A green candle (or white, depending on your chart settings) means:

• Price closed higher than it opened
• Buyers were stronger than sellers during that period
• The market moved up

Red (or Black) Candles = Bearish

A red candle (or black) means:

• Price closed lower than it opened
• Sellers were stronger than buyers during that period
• The market moved down

How to Remember This

Think of traffic lights:

• 🟢 Green = Go (price is going up)
• 🔴 Red = Stop (price is going down)

Or think of emotions:

• Green = Happy (buyers are winning)
• Red = Sad (sellers are winning)

Part 4: Reading Candle Patterns (What They Tell You)

Let's look at some common candlestick patterns and what they reveal:

Part 5: Understanding Timeframes

What is a Timeframe?

A timeframe is the period of time that each candlestick represents.

Examples:

• 1-minute (1M) candle = shows price action for 1 minute
• 5-minute (5M) candle = shows price action for 5 minutes
• 1-hour (1H) candle = shows price action for 1 hour
• 4-hour (4H) candle = shows price action for 4 hours
• 1-day (1D) candle = shows price action for 1 entire day
• 1-week (1W) candle = shows price action for 1 entire week

How to Change Timeframes in TradingView

What Each Timeframe Shows You

Different timeframes give you different perspectives on the same market—like zooming in or out on a map.

Short Timeframes (1M, 5M, 15M)

What they show:

• Very detailed, fast movement
• Every tiny price change
• Used by day traders and scalpers

Pros: You can catch quick moves, see price action in real-time

Cons: Very noisy (lots of random movement), easy to get overwhelmed, more stressful to watch

When to use: Advanced traders who want to make multiple trades per day.

Medium Timeframes (1H, 4H)

What they show:

• Clearer trends
• Less noise than short timeframes
• Still enough detail to see intraday movement

Pros: Good balance of detail and clarity, easier to identify patterns, less stressful than 1-minute charts

Cons: Still requires frequent monitoring, can miss very short-term opportunities

When to use: Active traders who check charts a few times per day.

Long Timeframes (1D, 1W)

What they show:

• The big picture
• Major trends and long-term patterns
• Filters out daily noise

Pros: Clearest view of market direction, less stress (you only check once per day), better for beginners, more reliable signals

Cons: Slower to react to changes, requires more patience

When to use: Swing traders and beginners (this is what we focus on in this course).

Part 6: Hands-On Practice (Let's Read Some Candles!)

Now it's time to put everything into practice. Follow these steps on your TradingView chart.