Anatomy of a candle

A candlestick condenses four prices from your chosen time slice into one shape: the open, the close, the high and the low. The thick part between open and close is the body; the thin lines above and below it are the wicks. Put numbers on it: for a candle that opens at 100, closes at 103, with a high of 104 and a low of 99.5, the body covers 100 to 103, while the upper wick runs from 103 up to 104 and the lower wick from 100 down to 99.5.

If the close is above the open, the candle is a bullish candle, usually drawn green. If the close is below the open, it is a bearish candle, usually red. The tip of the upper wick marks the highest price of that period; the tip of the lower wick marks the lowest.

So what does a single candle NOT tell you? Who was buying, who was selling, and what the next candle will do. A candle is only a summary of its own period; it becomes a story only when read together with the candles around it.