Candlestick charts look like someone let a toddler loose with a stamp set, and yet they're the dominant charting style used by professional traders worldwide. The question of how to read them is genuinely one of the most asked in trading — and rightly so, because there's more packed into each little candle than first meets the eye.

The short answer: every candle shows you four prices for a given time period — the open, the high, the low, and the close. The fat rectangular body shows the distance between open and close. The thin lines poking out above and below — called wicks or shadows — show how far price travelled beyond that range before snapping back. That's the whole skeleton, right there.

CONCEPTA green (or hollow) candle closed higher than it opened — buyers won that time period.
WARNINGA long wick doesn't mean the trend reversed — context and volume matter enormously.
KEY IDEAThe body size tells you conviction; the wick size tells you rejection.

Think of each candle like a boxing round scorecard. A big green body means the bulls dominated from bell to bell. A big red body means the bears were in control. A tiny body with long wicks on both ends — called a Doji — means the round was basically a draw, with neither side landing a clean punch. The shape tells you who had the momentum.

Bullish Bearish Doji Hammer High wick Candlestick Types

Once you can read individual candles, traders start grouping them into patterns — things like engulfing candles, morning stars, or shooting stars. These patterns are studied because they've historically preceded notable price moves, though no pattern is a guarantee of anything. The real skill is reading them in context: what's the trend, where's the volume, and where are the key price levels nearby? For deeper reading on pattern mechanics, Investopedia's candlestick guide is thorough, the Wikipedia entry on candlestick charts covers the Japanese origins brilliantly, and for pattern catalogues, the bullish engulfing pattern breakdown is a solid starting point.

Your practical takeaway today: pull up any chart, pick one candle, and name its four prices out loud. Open, high, low, close. Do that ten times and candlesticks stop looking like abstract art.

Master the single candle before worrying about patterns — the building block always beats the blueprint.

This content is for educational purposes only and does not constitute financial product advice. Past performance is not indicative of future results. Profit Logic Ltd (ACN 688 669 936) accepts no responsibility for errors or omissions in this content or anywhere on this website. Always seek advice from a licensed financial adviser before making investment decisions.