How to Read Candlestick Charts: OHLC, Bodies and Wicks
A candlestick chart compresses an entire trading session into one readable shape. Four prices go in — open, high, low, close — and what comes out is a small picture of who controlled the session and how firmly. Before any of the named candle chart patterns mean anything — hammers, dojis, engulfing pairs — you need to read a single candle fluently: which price sits where, what the body records that the wicks do not, and what the shape cannot tell you. That fluency is what this chapter builds.
This is the anatomy chapter of Gale’s technical-analysis guide. The overview chapter explains what price-and-volume analysis can and cannot do; the candlestick-patterns chapter catalogues the named formations. Here we stay on the single candle, because every pattern in that catalogue is two or three of these shapes in sequence.
What a candlestick chart records: the four prices
Every candle fixes exactly four facts about its period. Nothing else — no order flow, no news, no reason — is inside the shape.
| Element | Where it sits on the candle | What it records |
|---|---|---|
| Open | One end of the body | The first traded price of the period |
| Close | The other end of the body | The last traded price of the period |
| High | Tip of the upper wick | The highest price anyone paid during the period |
| Low | Tip of the lower wick | The lowest price anyone accepted during the period |
| Body | Rectangle between open and close | The net move: where the session finished relative to where it started |
| Wicks | Thin lines above and below the body | The excursion: prices visited but not held at the close |
| Colour | Body fill | Green (or white) when close is above open; red (or black) when close is below open |
An illustration: suppose a stock opens the day at ₹500, trades as high as ₹512, dips to ₹494 during a midday sell-off, and closes at ₹508. The candle for that day has a green body from ₹500 to ₹508, an upper wick reaching ₹512 and a lower wick reaching ₹494. Those four numbers are the entire information content. Two very different sessions — a steady grind upward, or a panic and sharp recovery — can produce the same candle if their four prices match.
Note what the body ignores: the high and low live only in the wicks, and colour depends only on close versus open — a red candle can still close higher than the previous day’s close. If terms such as open, close and circuit limit are new, the stock-market terminology guide defines them.
Candlestick chart anatomy in one figure
Two candles with identical highs, lows and body sizes — and opposite meanings. On the left, the green candle: the open is the bottom edge of the body, the close is the top edge. On the right, the red candle: the open is the top edge, the close is the bottom. On both, the wick tips mark the period’s high and low. This mirror-flip is the most common beginner error on a candle chart: the body edges swap roles with colour, while the wicks always mean the same thing.
Colour is a convention, not information. Indian platforms typically default to green/red; older styles use white/black. Whatever the palette, the rule is fixed: close above open is bullish, close below open is bearish.
Body versus wick: two different kinds of information
The body and the wicks answer different questions, and keeping them separate is most of the skill.
The body records commitment. It is the ground that one side actually took and held to the close. A tall body says the session moved decisively in one direction and stayed there; a small body says that, whatever happened in between, buyers and sellers finished close to where they began.
The wicks record rejection. A wick exists only because price visited a level and then left it. A long lower wick means sellers pushed the price down and could not keep it there; a long upper wick means buyers bid the price up and could not hold it. The wick is the part of the session that was attempted and reversed.
Read together, the ratio matters more than either part alone. A candle that is mostly body describes a one-sided session. A candle that is mostly wick describes a contested one. Neither reading says anything about tomorrow by itself, but the vocabulary lets you describe a chart precisely instead of impressionistically.
What long and short wicks record about the session
Four recurring wick-and-body configurations cover most of what a single daily candle can say. The named patterns built from them, with placement rules and reliability caveats, come in the next chapter.
A long lower wick
What it looks like: a small body near the top of the range with a lower wick at least twice the body’s height, and little or no upper wick.
Where it appears: most discussed after a decline or near a level buyers have defended before — the kind of level the support-and-resistance chapter maps.
What it suggests: sellers controlled part of the session, drove price well below the open, and lost that ground before the close. The session ended with the down-move rejected. In a downtrend this shape is the basis of the hammer pattern.
Failure mode: the rejection describes one session only. If the next day opens weak and closes below the wick’s low, the “defended” level has failed, and the long wick becomes a record of buyers who tried once and were absorbed. Long lower wicks appear regularly inside continuing downtrends.
A long upper wick
What it looks like: the mirror image — a small body near the bottom of the range with an upper wick at least twice the body’s height.
Where it appears: most discussed after an advance, or at a price zone where earlier rallies have stalled.
What it suggests: buyers pushed price well above the open and could not hold it; supply appeared into strength. After an uptrend this shape is the basis of the shooting-star pattern.
Failure mode: strong trends shrug off single rejections. One long upper wick inside a powerful advance often marks nothing more than a pause; several of them at the same zone, on rising volume, is a different and stronger observation. The count and the context do the work, not the one candle.
A thin body with wicks on both sides
What it looks like: open and close nearly equal, so the body shrinks toward a line, with wicks extending both ways. When open and close match exactly, this is the doji family.
Where it appears: anywhere, which is precisely its problem — indecision candles are common in quiet markets and in stalemates alike.
What it suggests: neither side finished the session with an advantage. Both directions were explored; neither was held. After a long directional run, that balance is at least a change from what came before.
Failure mode: a doji in the middle of a sideways range describes a dull session, nothing more. The shape only earns attention when it interrupts an established trend, and even then it marks a question, not an answer.
A full body with almost no wick
What it looks like: the body spans essentially the whole high-to-low range — price opened near one extreme and closed at the other. The pattern name is marubozu.
Where it appears: on days with one-sided news, results reactions, or sustained institutional buying or selling; also on low-volume days in thin stocks, where a single large order paints the same picture.
What it suggests: one side controlled the session from open to close with no meaningful counter-attack. It is the most decisive single-candle shape.
Failure mode: decisiveness is not durability. Gap-driven marubozu candles often mark the end of a move — the day everyone who wanted to act finally acted — rather than the start of one. Volume and the next few sessions decide which it was.
One candle, one timeframe
Every statement above says “the session” because a candle only summarises its own period. Throughout this guide, and on Gale’s daily screens, one candle equals one trading day. Change the chart timeframe and the same four-price logic applies to a different slice of time.
| Chart timeframe | One candle covers | The question it answers |
|---|---|---|
| 5-minute | 5 minutes of trading | How is the current session developing? |
| Hourly | One hour | How did the day’s phases unfold? |
| Daily | One full NSE/BSE session | Who won the day? |
| Weekly | Monday to Friday | Who won the week? |
| Monthly | One calendar month | What is the long-horizon direction? |
The aggregation changes the story. Five red daily candles with progressively smaller bodies can compress into a single weekly candle with a long lower wick — rejection of lower prices at the weekly scale, built from days of steady selling. Neither view is wrong; they answer different questions. Longer timeframes smooth noise and hide detail; shorter timeframes show detail and amplify noise — the same trade-off that governs the lookback settings in the moving-averages chapter.
The discipline that matters: pick the timeframe that matches your actual holding horizon, and do not switch timeframes until one of them shows the candle you were hoping to find. A shape that only exists on the 15-minute chart is evidence about 15-minute behaviour, nothing longer.
Read volume beneath the price
A candle shows what price did; volume shows how many shares changed hands while it happened. Most charting platforms draw volume as bars beneath the price panel, and the candle above should be read together with the bar below.
The same shape carries different weight at different participation. A long lower wick on three times the stock’s average daily volume records a fight many participants joined — heavy selling met by heavy buying. The identical wick on a fraction of average volume may record only a thin order book being pushed around; in smaller NSE listings, a handful of trades. The candle looks the same; the evidence is not.
Volume is also the cheapest cross-check on any candle reading, because it is not derived from price. Momentum tools such as the RSI and MACD are calculated from closing prices, so they largely restate what the candles already show; volume is an independent measurement. Gale’s high-volume stocks screen surfaces each day’s unusual-participation names — Gale computes these readings daily from exchange-published data, so the live screens are this chapter applied to today’s market rather than a textbook’s examples.
From single candles to candle chart patterns
Everything above is vocabulary. The grammar — hammers and hanging men, engulfing pairs, morning and evening stars, tweezers — is single candles arranged in sequence at particular places on the chart, and it is the subject of the candlestick-patterns chapter.
Two principles carry over. First, location does most of the work: the same long-lower-wick candle means more at a repeatedly defended level than in the middle of nowhere, which is why the support-and-resistance chapter sits next in reading order. Second, no arrangement of candles guarantees anything. Patterns describe recurring behaviour and suggest tendencies; the near-breakout stocks screen exists precisely because a promising structure still needs the next sessions to confirm or fail it.
FAQ
What do the wicks on a candlestick chart mean?
Wicks mark the period’s high and low — prices traded but not held at the close. A long wick records an attempted move that reversed: a lower wick, a sell-off bought back; an upper wick, a rally sold into.
Why is a candle green or red?
Colour compares close with open within the same candle. Close above open gives a green (bullish) body; close below open gives a red (bearish) body. A red candle can still close above the previous day’s close — colour says nothing about day-to-day change.
Is a candlestick chart better than a line chart?
They answer different questions. A line chart joins closing prices; a candle chart adds each period’s open, high and low, showing intra-period conflict a line discards. For studying sessions, candles carry more information; for a quick multi-year view, a line is often easier to read.
What timeframe should a beginner use?
Daily candles are the common starting point: one candle per session, enough history on one screen, far less noise than intraday charts. Weekly candles add context. Intraday timeframes demand fast decisions, and in SEBI’s published studies of retail derivatives traders the large majority lost money.
Can a single candle predict the next day’s move?
No. A candle summarises a finished session. Some shapes precede reversals more often than chance in some studies, but every configuration above appears routinely in trends that simply continue. Single-candle evidence is the weakest kind; sequence, location and volume add the weight.
Sources
- Steve Nison, Japanese Candlestick Charting Techniques (1991), the book that introduced candlestick methods to Western markets
- Zerodha Varsity: Candlesticks, an Indian-market walkthrough of chart types and candle anatomy
- TradingView: candlestick chart documentation, platform-level conventions for OHLC rendering
- NSE technical-analysis programme material, exchange-hosted educational reference
What to weigh
A candle chart is a recording instrument, not a forecasting one. It fixes four prices per period with perfect honesty and says nothing about why they happened or what follows. The practical skill is restraint: describe the body, the wicks, the timeframe and the volume accurately, resist the urge to make one shape carry a conclusion, and let sequence and location — the subjects of the next chapter — add meaning that a single candle cannot. If a reading only works after switching timeframes or ignoring the volume bar beneath it, that is the chart telling you the evidence is not there.
This article is for research and education, not personalised advice; Gale is not a SEBI-registered investment adviser or research analyst.