Candlestick charts.
Understand the open, high, low and close, recognize common candle shapes, and learn what a chart can and cannot tell you.
1. What Is a Candlestick Chart?
A candlestick summarizes four prices for one interval: open, high, low and close (OHLC). On a time-based chart, the interval might be one minute, one hour or one day. The current candle keeps changing until its interval ends.
Candlesticks and OHLC bars contain the same four prices; they draw them differently. A candle's body makes the open-to-close change easy to see. A line chart usually connects one value per interval, often the close.
Schematic data: invented prices and relative volume, with time running left to right. The upper area shows OHLC candles; the lower bars show activity for the same intervals. These are not actual Bitcoin prices.
Read the prices first: a candle records the interval's endpoints and extremes. It does not reveal the order of every trade, how often a price was visited, or what individual buyers and sellers intended.
2. Anatomy of a Candlestick
The body spans the open and close. The upper and lower wicks extend to the high and low. A wick can be absent when the body reaches that extreme; a doji has little or no visible body.
Bullish (Green)
Close > Open
Bearish (Red)
Close < Open
Body
The rectangle spans the open and close. Its height is the absolute difference between them; a large body does not show the order of trades within the interval.
Upper Wick
The line above the body reaches the interval's highest traded price. Its length measures the distance from that high to the higher body edge.
Lower Wick
The line below the body reaches the interval's lowest traded price. Its length measures the distance from that low to the lower body edge.
3. Bullish vs Bearish Candles
With the color convention used here, green means the close is above the open and red means it is below. This describes the completed interval, not the next price move.
Bullish Candle (Green)
- Close higher than open
- The interval ended above its opening price
- A taller body means a larger open-to-close rise
- A short lower wick means the low was near the body
Bearish Candle (Red)
- Close lower than open
- The interval ended below its opening price
- A taller body means a larger open-to-close fall
- A short upper wick means the high was near the body
Check the chart's color settings: some platforms or regions use different colors, or filled and hollow bodies. Names such as Three White Soldiers are historical; this guide draws rising candles in green and falling candles in red.
4. Single-Candle Patterns
These six names describe individual candle shapes. Their conventional interpretations depend on the preceding trend and later price action; the shape alone does not establish a trade's probability of success.
All pattern diagrams are schematic. Time runs left to right; the highlighted candles form the named pattern. The dim later candles show one invented outcome, not a forecast. Classic body gaps are illustrated even though continuous markets have no scheduled overnight closure.
Doji
Small net changeThe open and close are nearly equal, leaving a very small body. Wicks show the interval's range. A doji is often interpreted as indecision, but it does not by itself predict a reversal.
Significance: Read with the preceding trend
Hammer
Possible upward reversalA small body near the high with a lower wick at least twice the body's height, after a decline. The interval traded below its body and closed back near the high. Traders watch subsequent prices for a possible recovery.
Significance: Watch the low and later candles
Inverted Hammer
Possible upward reversalA small body near the low with a long upper wick, after a decline. The interval reached above the body but closed below its high. A possible recovery needs evidence from later candles.
Significance: Needs later price context
Shooting Star
Possible downward reversalA small body near the low with a long upper wick, after an advance. The close is below the interval's high. It is conventionally watched for a possible downward reversal, which may not occur.
Significance: Watch the high and later candles
Marubozu
Large candle bodyA long body with no wicks, or very small ones. In the ideal rising example, open equals low and close equals high; the falling version reverses those endpoints. This does not mean every trade moved in one direction.
Significance: Large net move in this interval
Spinning Top
Small net changeA small body with substantial upper and lower wicks. The interval moved beyond both body edges while its net open-to-close change stayed small. The shape alone does not identify who controlled trading.
Significance: Small net move within a wider range
5. Multi-Candle Patterns
These eight patterns combine two or three candles. Read the full sequence and preceding trend. A named pattern is a description of observed prices, not a promise that the following candles will continue or reverse.
Bullish Engulfing
Possible upward reversalAfter a decline, a green candle's body fully covers the preceding red body's price range. The wicks need not be engulfed. This is a conventional possible recovery pattern, not a measured success rate.
Bearish Engulfing
Possible downward reversalAfter an advance, a red candle's body fully covers the preceding green body's price range. The wicks need not be engulfed. Traders watch for a possible decline, but the pattern can fail.
Morning Star
Possible upward reversalAfter a decline: a long red candle, a small body that gaps below the first body, then a green candle closing above the first body's midpoint. This schematic uses the classic body gap; subsequent recovery is not guaranteed.
Evening Star
Possible downward reversalAfter an advance: a long green candle, a small body that gaps above the first body, then a red candle closing below the first body's midpoint. The classic body gap is illustrated here; a later decline is not guaranteed.
Three White Soldiers
Rising sequenceThree long green candles with progressively higher closes. Each opens inside the preceding body and closes near its own high. They describe a rising sequence, without establishing how long it will last.
Three Black Crows
Falling sequenceThree long red candles with progressively lower closes. Each opens inside the preceding body and closes near its own low. They describe a falling sequence, without guaranteeing further declines.
Tweezer Top
Possible downward reversalAfter an advance, two adjacent candles have matching highs; the illustrated first candle is green and the second is red. Their shared high is a level to observe, not proof that resistance will hold.
Tweezer Bottom
Possible upward reversalAfter a decline, two adjacent candles have matching lows; the illustrated first candle is red and the second is green. Their shared low is a level to observe, not proof that support will hold.
Context matters: a reversal pattern is interpreted relative to a preceding move. The same shape in a sideways market can have a different meaning. Define the trend, timeframe and confirmation criteria before evaluating a pattern.
6. Reading Volume with Candles
Volume measures trading activity during the interval. Check whether the feed counts base-asset units, quote value or contracts, and which venue it covers. Compare like-for-like intervals; a taller bar does not identify participants or guarantee the next price direction.
These are separate hypothetical examples with relative scales, not a controlled experiment or market history. The highlighted price candle and volume bar belong to the same interval. Later prices are invented outcomes; both continuation and reversal remain possible at either volume level.
| Scenario | Volume | Interpretation |
|---|---|---|
A candle closes well above its open. | High Volume | More units traded than in the nearby intervals. The drawing then rises, but the higher activity does not establish that outcome in a real market. |
A candle closes well above its open. | Low Volume | Fewer units traded than in nearby intervals. The drawing then falls; low activity alone does not make that result inevitable. |
A hammer's lower wick reaches the illustrated reference level. | High Volume | The illustrated low coincides with higher activity. Later candles show one possible recovery, not proof that this level will hold. |
A candle closes above the illustrated resistance line. | High Volume | The close above the line accompanies higher activity. The drawn continuation is hypothetical; an actual breakout can still fail. |
A candle closes above the illustrated resistance line. | Low Volume | The close above the line accompanies lower activity. Later candles fall below it in this example, but low volume alone does not identify a false breakout. |
A doji forms after a sequence of rising closes. | High Volume | Many units trade while open and close remain close together. That combination does not identify traders' intentions or determine the next direction. |
Volume adds context, not certainty. Breakouts can fail on high volume and persist on low volume. Price patterns and volume alone do not establish a profitable strategy after fees, spread and slippage.
7. Common Mistakes
Trading every candle
A new candle is not a reason to trade. Evaluate defined rules and total costs; frequent entries can accumulate fees and losses.
Ignoring the timeframe
Check the interval, venue and whether the candle has closed. A five-minute observation and a daily observation describe different periods; their reliability must be evaluated, not assumed.
Forgetting market context
Read the preceding highs, lows and range before naming a reversal. The same shape can have a different interpretation in a rising, falling or sideways market.
Relying on candlesticks alone
Compare price patterns with other relevant information and a defined risk plan. Adding volume or indicators does not automatically make a strategy profitable.
Misreading wicks and bodies
Separate the open-to-close body from the full high-to-low range. OHLC does not tell you whether the high or low occurred first.
Overcomplicating the analysis
Use clear, testable definitions instead of collecting pattern names. Evaluate rules on data that was not used to design them, including costs and losing cases.
Frequently Asked Questions
What is the best time frame for candlestick charts?+
Are candlestick patterns reliable for crypto?+
What is the difference between a candlestick and a bar chart?+
How do I identify a trend using candlesticks?+
What does a long wick mean on a candlestick?+
Can I use candlestick charts for Bitcoin?+
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Disclaimer
This guide is for educational purposes only and does not constitute financial, investment, or tax advice. Candlestick patterns do not guarantee future price movements. Past performance is not indicative of future results. Always conduct your own research and consult qualified professionals before trading.
Educational content · Editorial review: 7 September 2026