What Is Candlestick Chart?
Candlestick charts originated in 18th-century Japan, where Munehisa Homma used them to trade rice. Each candle represents a fixed time period (1-minute, 1-hour, 1-day, etc.) and contains four data points: open, high, low, and close.
The rectangular body shows the range between open and close. Green (or white/hollow) bodies indicate close above open (bullish); red (or black/filled) bodies indicate close below open (bearish). The thin lines extending above and below the body — called wicks, shadows, or tails — show the high and low prices reached during the period.
Candlesticks reveal more information than line charts. They show not just where price ended but how it got there — the range, the conviction, the rejection at extremes.
Most technical analysis is built on top of candlestick reading. Understanding what a candle shape means before considering indicators leads to better trading decisions.
Related terms
- Doji Candlestick — A candlestick where open and close are nearly equal — indicates indecision in the market.
- Hammer Candlestick — A bullish reversal candle with a small body and long lower wick, appearing at the bottom of declines.
- Engulfing Pattern — A two-candle reversal pattern where the second candle fully engulfs the first.