Candlestick
Technical Analysis
What it means
A bar that shows the open, high, low, and close price for a period. The body is colored (green/red) by whether close was above or below open.
Example
A green 1-hour candle with open $100, close $105, low $99, high $106 has a $5 green body and thin wicks above and below -- price rose over the hour.
Mistake beginners make
Beginners read one candle in isolation and call it a signal. A single candle means almost nothing; what matters is where it forms relative to the surrounding context.
Related terms
- Doji — A candle where open and close are nearly equal, making a thin cross or plus shape. It sign…
- Hammer — A candle with a small body near the top and a long lower wick, forming a hammer shape. It …
- Engulfing Pattern — A two-candle reversal signal where the second candle completely covers the body of the fir…