How to read candlestick charts for beginners

Candlestick charts are the default view on almost every trading platform. Each candle packs four prices into one shape, and learning to read them is the first step in any chart based approach. This guide explains how candles are built, how timeframes work, the common single candle and two candle patterns, and the limits you should keep in mind.

How a candle is built

Each candle shows what the price did during one period, such as one hour or one day. It records four prices, often shortened to OHLC: the open, the high, the low and the close.

• Body. The thick part between the open and the close.
• Wicks. The thin lines above and below the body, also called shadows. The top of the upper wick is the high of the period and the bottom of the lower wick is the low.
• Colour. If the close is above the open, the candle is usually green or white and is called bullish. If the close is below the open, it is usually red or black and is called bearish. Colours can be changed in most platforms, so check yours.

A long body means the price travelled far from open to close. A long wick means the price reached a level during the period but was pushed back before the close.

Timeframes

The same market looks different on different timeframes. A daily candle summarises a whole trading day, while a 5 minute chart shows 288 candles for the same day. Shorter timeframes show more detail and more noise; longer timeframes show the bigger picture.

Timeframe	One candle covers	Often used for
M5, M15	5 or 15 minutes	Fine timing within a session
H1, H4	1 or 4 hours	Intraday and multi day context
D1	One trading day	Main trend and key levels
W1	One week	Long term picture

The daily candle depends on when your broker's server starts the day. Many forex brokers close the day at 5 pm New York time, which avoids a small Sunday candle, but not all do. Two platforms can therefore show slightly different daily candles for the same market.

Common single candle patterns

Traders give names to shapes that appear often. They describe what happened in one period; they do not predict what happens next on their own.

Pattern	Shape	What it shows
Doji	Open and close almost equal, wicks on both sides	Indecision: neither side won the period
Hammer	Small body near the top, long lower wick	Sellers pushed lower, buyers pushed back
Shooting star	Small body near the bottom, long upper wick	Buyers pushed higher, sellers pushed back
Marubozu	Long body, little or no wick	One side controlled the whole period

Two candle patterns

Engulfing. A candle whose body completely covers the body of the previous candle, in the opposite colour. A bullish engulfing pattern appears after a decline, with a green body covering a red one; a bearish engulfing pattern is the reverse.

Inside bar. A candle whose high and low both sit inside the range of the previous candle. It shows a pause or narrowing range, and many traders watch for a break of the larger candle's high or low.

Context matters more than shape

A pattern is far more meaningful at an important level than in the middle of nowhere. A hammer at a level where the price has turned several times before says more than the same hammer in a quiet range. Traders usually combine candles with the trend on a higher timeframe, with clear price levels and with the economic calendar, because a major release can override any pattern within seconds. Our market sessions and calendar guide explains when those releases happen.

Wait for the candle to close before treating a pattern as complete. A candle that looks like a hammer halfway through the hour can look completely different by the close.

Limits to keep in mind

• No pattern works every time; many fail, so a stop loss is still needed.
• Patterns on very short timeframes are more affected by random noise and spreads.
• Gaps over weekends can distort the first candle of the week.
• Results depend on risk control as much as on reading the chart. See risk management for traders.

Candle checklist

• I can read the open, high, low and close of any candle.
• I check a higher timeframe before acting on a lower one.
• I wait for the candle to close.
• I look at where a pattern forms, not just its shape.
• I check the calendar for major releases.

Frequently asked questions

What do the wicks on a candle show?

The wicks show the highest and lowest prices reached during the period. A long wick means the price reached a level but was pushed back before the close.

Why do daily candles differ between platforms?

The daily candle depends on when the broker server starts and ends the day. Many forex brokers use 5 pm New York time, but not all do.

Are candlestick patterns reliable?

No pattern works every time. Patterns describe what happened in one period, so traders use them with trend, price levels and risk control rather than on their own.

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