Candlestick patterns: single candles and what they show

A single candle shows the fight between buyers and sellers in one period. Learn what its parts and shapes can tell you, and what they cannot.

A candle is a record of one period of trading. During that period, buyers and sellers meet and push price against each other. When the period ends, the candle freezes that struggle into a single shape. Each candle on a chart covers the same fixed length of time, so you can compare one with another fairly.

The candle has a body and two wicks. The body is the thick part. It runs from the open to the close. The open is the first price of the period. The close is the last price of the period. The upper wick is the thin line above the body, and its top marks the high of the period. The lower wick is the thin line below the body, and its bottom marks the low of the period. Those are the parts you will see on every candle.

The direction of the body tells you one thing only. A rising candle has a close above its open. A falling candle has a close below its open. The body is often drawn in two colours to separate these two cases. The wicks show the range that price travelled during the period, beyond the open and the close.

Read the candle as a small record of what already happened. It describes one period and nothing more. It does not say what the next period will bring. Risk is always present in trading, and a candle does not remove it.

Reading the body and the two wicks

The open is the first price of the period. The close is the last price of the period. The high is the top of the upper wick. The low is the bottom of the lower wick. These four points sit on every candle you will ever see. Learn to find them in order before you study any shape.

Start at the open. Follow the body to the close. A rising candle closes above its open. A falling candle closes below its open. The distance between the two is the body. A long body means one side held control for most of the period. A short body means control was weak or shared. Now look at the wicks. The upper wick runs from the body to the high. The lower wick runs from the body to the low. A long upper wick means price went up and sellers pushed it back. A long lower wick means price went down and buyers brought it back.

Read the two lengths together, never alone. A long body with short wicks shows steady control. A short body with two long wicks shows a fight that ended near where it began. A small body near the top with a long lower wick is a hammer. A small body with two wicks of similar length is a spinning top. Each shape describes one period only.

On a demo chart, cover the next candle and write your reading first. Then uncover it and compare. Risk stays present in every period, and a candle only describes what already happened.

Shapes beginners meet first

A doji forms when the open and the close sit very close together. The body shrinks to a thin line, and wicks may extend above and below it. The shape says the period ended near where it began. Buyers and sellers pushed price around but neither kept control at the close. It can mark a pause or a balance. It cannot say which side will win in the next period. A doji in a quiet market and a doji after a strong move look the same on the chart but carry different weight.

A hammer has a small body near the top of its range and a long lower wick. The lower wick shows price travelled down during the period, then buyers brought it back near the top. It can show that sellers lost their grip late in the period. It cannot show that a fall is over. The same shape inside a strong fall and inside a flat market are not the same event. Read the candles before it and the level where it forms before you give the shape any meaning.

A spinning top has a small body with two wicks of similar length. Price moved both ways and closed near the middle. It can show indecision or a pause in control. It cannot forecast direction. Treat it as a sign that the period settled, nothing more.

Where the shape stops and context begins

A common beginner mistake is to read one candle as a message about the next move. The shape only describes the period that just closed. It says nothing about the period that follows. Treat each candle as a record of what buyers and sellers did, not as a hint about what they will do.

Another mistake is to ignore the time frame. The same shape means different things on a chart of short periods and a chart of long periods. A small body on a slow chart covers a wide price range. A long wick on a fast chart may last only moments. Fix one time frame before you study any shape, and note which frame you used.

Beginners also forget the level where a candle forms. A shape near a price the market has touched many times before sits in a different setting from the same shape in the middle of empty space. Mark the recent highs and lows first, then look at the candle. The level gives the shape its setting.

Practise on a demo chart by covering the candles after each shape you mark. Write your guess, then uncover the next few candles and compare. Do this many times before you judge the shape. Risk stays present in every trade, and a candle does not lower it.

Practising on a demo chart and linking to risk

Set your demo chart to one time frame and keep it fixed for the whole exercise. Choose a single shape, such as the doji or the hammer. Each day, mark every instance you find and note the time of day and the level where it appeared. Write one line on what price did over the next few candles. Do not place any order. Do this for five sessions before you judge the shape.

Next, sort your notes by market condition. Count how many instances formed in a rising stretch and how many in a falling stretch. Count how many were followed by movement in the direction the shape suggested and how many were not. Keep the counts in a notebook or a printed page. Your own tally teaches more than a long list you never open.

Link this to risk in plain terms. Decide before you study how much of your demo balance one position may put at risk. Write that number down. A candle shape never changes that number. If a shape appears and your note says the context is unclear, skip it. Skipping is a decision, not a failure. Risk stays present in every trade, and a candle only describes one finished period.

Words with a dotted underline open their explanation in the glossary.