Before any indicator, there's the candle. Each one packs four numbers โ open, high, low, close โ into a single shape, and once you can read that shape you're reading the raw fight between buyers and sellers for that period.
The anatomy
- The body is the distance between the open and the close. A green (or hollow) body means price closed higher than it opened โ buyers won the period. A red (filled) body means it closed lower โ sellers won.
- The wicks (or shadows) are the thin lines above and below. They mark the highest and lowest price reached during the period, before price was pushed back. A wick is rejected territory โ a place price went and couldn't hold.
That's the whole vocabulary. A long green body with tiny wicks = buyers in complete control. A tiny body with huge wicks both sides = a violent fight that ended in a draw (indecision).
The candles worth knowing
You don't need the 100-candle glossary. A few carry real information:
- Marubozu (big body, almost no wick) โ one side dominated start to finish. Conviction.
- Doji (open โ close, so almost no body) โ perfect indecision. Meaningful after a big move, where it warns the trend is stalling.
- Hammer (small body up top, long lower wick) โ sellers drove price down hard, then buyers slammed it back up by the close. A rejection of lower prices; bullish when it appears at a low.
- Shooting star (small body at the bottom, long upper wick) โ the mirror image: buyers pushed up, sellers rejected it. Bearish at a high.
- Engulfing โ a body that completely swallows the previous candle's body. A bullish engulfing at a low, or bearish at a high, signals a shift in who's in control.
One candle is a sentence, not a story. A hammer in the middle of nowhere means little; a hammer at a support level, after a downtrend, with rising volume, is a setup. Candles earn their meaning from where they appear โ which is exactly what the next lessons are about.
Next: the levels that give candles their meaning โ support and resistance.
In the lab
Candles make more sense with volume underneath them โ a huge wick on tiny volume is noise; the same wick on heavy volume is a fight someone lost.