The Parts of a Candlestick
A candlestick is made up of a rectangular "body" and lines extending above and below it called the "upper wick" and "lower wick." The top and bottom of the body represent whichever of the open and close is higher and lower, while the tip of the upper wick marks the high for the period and the tip of the lower wick marks the low. A single candle lets you read both the direction and the magnitude of price movement at a glance.
How to Read It, and What to Watch Out For
A candle is called bullish when the close is higher than the open, and bearish when the close is lower than the open. Some traders interpret a longer body as a sign that price movement had stronger momentum during that period. However, the shape of a single candlestick alone cannot tell you where the price is headed next. It is common practice to look at a sequence of several candles together with trading volume and other technical indicators before drawing any conclusions.
This article is provided for general informational purposes only and does not recommend or solicit the purchase or sale of any specific investment method or security. Final investment decisions are your own responsibility.
Frequently Asked Questions
- What does a candlestick represent?
- A single candlestick summarizes four prices for a given period — the open, close, high, and low — in one chart element. The rectangular "body" shows the relationship between the open and close, while the lines extending above and below (the "wicks") show the high and low reached during the period.
- What is the difference between a bullish and a bearish candle?
- A candle where the close is higher than the open is called a bullish candle, and one where the close is lower than the open is called a bearish candle. Colors vary by charting tool, so it is best to judge by the position of the body rather than color alone.
- Can candlesticks alone tell you where the price is headed next?
- Candlesticks only visualize past price movement — they do not predict or guarantee future prices. They are typically used as one input among others, alongside additional indicators and information.
