Japanese Candlesticks: How to Read Candlestick Charts (Beginners)
A Japanese candlestick is a way to show on a chart how the price moved during one period: where it opened and closed, and what the high and low were.
What a candle is made of
| Part | What it shows |
|---|---|
| Body | The distance from the open price to the close price |
| Upper wick | The high for the period |
| Lower wick | The low for the period |
| Color | Green — closed above the open, red — below |
The candle's period is set by the timeframe: on a daily chart, one candle is one day.
How to read candles
- A long body — one side clearly won.
- A small body with long wicks — indecision.
- A long lower wick at support — buyers bought the dip.
- A long upper wick at resistance — sellers didn't let the price go higher.
The main rule
A single candle on its own means little. Look at where it appeared: at a level, in a trend or in the middle of a sideways range. How candles and levels work together is covered in support and resistance levels, and patterns are explained in the lesson on candlesticks and patterns.
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- A candle shows the open, close, high and low.
- Wicks are rejected prices, the body is the period's result.
- Read a candle together with the level and the trend.
Frequently asked questions
Why are they called Japanese candlesticks?
This way of charting prices was invented by Japanese rice traders, and Steve Nison popularized it in the West.
Are candles always green and red?
No, you can change the colors in the chart settings. Sometimes rising candles are white and falling ones are black.
Are candlesticks enough to trade on?
No. Candles are one part of analysis; decisions are made considering the trend, levels and risk.
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