Introduction

Welcome to Lesson 2.2! In this lesson, you'll learn how to read candlesticks—the most important visual tool in trading. If charts are the language of the market, then candlesticks are the alphabet.

Here's the good news: Candlesticks are simple. Each candle has only a few parts, and once you know what those parts mean, you can read any chart in the world.

Important

One candle alone is never enough to make a trading decision. Candles are like words in a sentence—you need to read several of them together to understand the full story.

The Anatomy of a Candlestick

A candlestick is a visual representation of price movement during a specific period of time. That period could be 1 minute, 1 hour, 1 day—it depends on the timeframe you're looking at.

The Four Key Prices: OHLC

Every candle shows you four prices:

  • Open (O): The price at the start of the time period
  • High (H): The highest price reached during that period
  • Low (L): The lowest price reached during that period
  • Close (C): The price at the end of the time period
Open: 1.1000
Close: 1.1015
High: 1.1020
Low: 1.0990
Example: 1-Hour Candle on EURUSD

The candle opened at 1.1000 (the price at the start of the hour)

During that hour, the price went as high as 1.1020 (the high)

It also dropped as low as 1.0990 (the low)

By the end of the hour, the price closed at 1.1015 (the close)

Result: O = 1.1000, H = 1.1020, L = 1.0990, C = 1.1015

The Two Main Parts of a Candle

1. The Body

The body is the thick, rectangular part of the candle. It shows the range between the open price and the close price.

  • If the close is higher than the open, the body is usually colored green (or white). This is called a bullish candle.
  • If the close is lower than the open, the body is usually colored red (or black). This is called a bearish candle.

What the body tells you:

  • A large body means there was strong movement in one direction
  • A small body means the price didn't move much (indecision)

2. The Wicks (Shadows)

The wicks are the thin lines that extend above and below the body. They show the high and low prices reached during that time period.

  • The upper wick shows how high the price went before coming back down
  • The lower wick shows how low the price went before coming back up
What Wicks Tell You

Wicks tell you a story about rejection. They show moments when one side (buyers or sellers) tried to push the price in a direction, but the other side pushed back.

  • Long upper wick = Sellers stepped in and pushed price back down
  • Long lower wick = Buyers stepped in and pushed price back up

Reading Bullish vs Bearish Candles

Bullish Candle

Closes higher than it opened. Buyers were in control. Shows upward pressure.

Bearish Candle

Closes lower than it opened. Sellers were in control. Shows downward pressure.

Doji

Open and close are nearly the same. Shows indecision. Neither side won.

Interpreting Candle Wicks

Long Upper Wick

A long upper wick means:

  • Buyers tried to push the price higher
  • Sellers stepped in and rejected that move
  • The price came back down

What this suggests: Selling pressure at higher levels. Resistance.

Long Lower Wick

A long lower wick means:

  • Sellers tried to push the price lower
  • Buyers stepped in and rejected that move
  • The price came back up

What this suggests: Buying pressure at lower levels. Support.

No Wicks (or Very Small Wicks)

A candle with little to no wicks means:

  • One side was completely in control
  • There was no rejection or pushback

What this suggests: Strong momentum in one direction.

Understanding Timeframes

A timeframe tells you how much time each candle represents. In TradingView, you can change the timeframe at the top of the chart.

Common Timeframes:

  • 1 minute (1m): Each candle = 1 minute of price action
  • 5 minutes (5m): Each candle = 5 minutes
  • 15 minutes (15m): Each candle = 15 minutes
  • 1 hour (1H): Each candle = 1 hour
  • 4 hours (4H): Each candle = 4 hours
  • 1 day (1D): Each candle = 1 full trading day
  • 1 week (1W): Each candle = 1 week
Beginner Tip

Start by analyzing higher timeframes (4H or 1D) to see the overall trend. Then zoom into lower timeframes (1H or 15m) to find entry points.

Why this matters: The same market can look completely different on different timeframes.

Basic Candle Stories

Let's put it all together. Here are simple "candle stories" that help you understand what's happening in the market.

Story 1: Strong Green Candle with Small Wicks

What you see: Large green body, small or no wicks

What it means: Buyers were in full control. Strong upward momentum.

Story 2: Strong Red Candle with Small Wicks

What you see: Large red body, small or no wicks

What it means: Sellers were in full control. Strong downward momentum.

Story 3: Green Candle with Long Upper Wick

What you see: Green body, long upper wick

What it means: Buyers pushed up, but sellers rejected. Possible resistance level.

Story 4: Red Candle with Long Lower Wick

What you see: Red body, long lower wick

What it means: Sellers pushed down, but buyers stepped in. Possible support level.

Story 5: Doji (Small Body, Long Wicks)

What you see: Very small body, wicks on both sides

What it means: Indecision. Neither buyers nor sellers won. Often appears before direction change.

Important Reminder: Context is Everything

Critical Lesson

Single candles alone are NOT trading signals.

A green candle doesn't automatically mean "buy." A red candle doesn't automatically mean "sell." A long wick doesn't guarantee a reversal.

Why? Because candles are just one piece of the puzzle. You need to look at:

  • Where the candle appears (at support? at resistance? in a trend?)
  • What the surrounding candles show (is this part of a pattern?)
  • What other tools say (indicators, volume, trend lines)

Think of candles like words. One word alone might not make sense, but when you put several words together, you get a sentence. When you put several candles together with context, you get a trading story.

Practice Task

Before moving to the next lesson:
  • Open TradingView and go to the EURUSD chart
  • Set the timeframe to 1 hour (1H)
  • Look at the last 10 candles on the chart
  • For each candle, ask yourself: Is it bullish or bearish? Does it have long wicks?
  • Now switch to daily (1D) timeframe. Notice how the story changes
Reflection Questions
  • Why is it important to look at both the body and the wicks of a candle?
  • What does a long lower wick suggest about buyer and seller behavior?
  • Why should you never trade based on one candle alone?