How to read candlestick charts: a plain-English guide
By the Ozelinx editorial team · Published · Updated · 8 min read
Key takeaways
- Each candle shows four prices for one period: open, high, low and close (OHLC).
- A green (up) candle closed above its open; a red (down) candle closed below it.
- Wicks show the extremes traders reached but could not hold; long wicks signal rejection.
- Higher timeframes filter noise; patterns mean more when they appear at key levels and with volume.
Candlestick charts are the default view on almost every exchange and charting site, including our live crypto chart. They pack a lot of information into a small space, which is exactly why they can look confusing at first. This guide explains how to read them step by step.
The four prices in every candle
Each candle represents one period of trading — one minute, one hour, one day or one week, depending on the timeframe you choose. Within that period, four prices matter:
- Open — the first traded price of the period.
- High — the highest price traded.
- Low — the lowest price traded.
- Close — the last traded price of the period.
Together these are called OHLC data. Crypto trades 24/7, so a “daily” candle on most exchanges runs from 00:00 to 24:00 UTC rather than following a stock-exchange session.
Body, wicks and colour
The thick part of the candle is the body. It stretches from the open to the close. If the close is higher than the open, the candle is usually drawn green (or hollow) — buyers won that period. If the close is lower, it is drawn red (or filled) — sellers won.
The thin lines above and below the body are the wicks (also called shadows). The top of the upper wick is the high and the bottom of the lower wick is the low. Wicks show prices that were reached but not held. A long upper wick means the price pushed higher but was sold back down before the period ended; a long lower wick means dips were bought.
The size of the body relative to the wicks tells you how decisive the period was. A large body with small wicks is a strong, one-sided move. A tiny body with long wicks shows indecision.
Timeframes change the story
The same market can look bullish on a 15-minute chart and bearish on a daily chart. Each higher timeframe combines many lower-timeframe candles: one daily candle contains 24 one-hour candles.
A practical routine is “top-down”: look at the weekly or daily chart for the overall trend and major levels, then move to the 4-hour and 1-hour charts to see how price is behaving near those levels. On our chart you can switch between 1m, 5m, 15m, 1h, 4h, 1D and 1W with one click.
Common single-candle patterns
- Doji — open and close are almost equal, giving a cross shape. It signals indecision; after a strong trend it can warn that momentum is fading.
- Hammer — a small body near the top of the range with a long lower wick, appearing after a decline. Sellers pushed price down but buyers took it back.
- Shooting star — the mirror image: a small body near the bottom with a long upper wick after a rise, showing rejected buying.
- Marubozu — a large body with little or no wick, showing strong control by one side for the whole period.
Common multi-candle patterns
- Engulfing — a candle whose body completely covers the previous candle’s body in the opposite direction. A bullish engulfing after a decline, or a bearish engulfing after a rally, suggests a shift in control.
- Inside bar — a candle whose high and low fit inside the previous candle’s range. It marks consolidation; traders watch for a breakout from the range.
- Three white soldiers / three black crows — three strong consecutive candles in the same direction, each closing near its extreme.
These names are descriptions of behaviour, not guarantees. The same pattern fails often, especially on low timeframes and in thin markets.
Add context: levels and volume
Patterns carry more weight when they appear at a level the market already cares about: a previous high or low, a round number, or a moving average. Volume helps too. A breakout candle on rising volume shows real participation; the same candle on falling volume is easier to reverse. Our chart shows volume bars under the candles by default, and you can add moving averages, Bollinger Bands and more — see technical indicators explained.
Mistakes to avoid
- Reading the last candle before it closes. A candle can change completely until its period ends.
- Ignoring the higher timeframe. A bullish pattern on the 5-minute chart inside a daily downtrend is a weak signal.
- Pattern hunting without a plan. Decide in advance where you would be wrong (your stop) and how much you are willing to lose; our position size calculator helps with that.
- Treating charts as certainty. Charts show what happened, not what will happen.
Frequently used terms
If a word on a chart is unfamiliar — support, resistance, liquidity, open interest — check our glossary.
Frequently asked questions
What does a candlestick show?
One candle summarises trading over a chosen period, such as one hour or one day. The body spans the opening and closing prices, and the thin lines (wicks or shadows) mark the highest and lowest prices traded in that period.
Which timeframe should beginners use?
Start with daily candles to understand the main trend, then zoom into 4-hour or 1-hour candles for detail. Very short timeframes such as 1 minute are dominated by noise and are harder to read.
Do candlestick patterns predict price?
No pattern predicts price reliably on its own. Patterns describe how buyers and sellers behaved; they are more meaningful at important support or resistance levels, on higher timeframes and when confirmed by volume.
This guide is general information, not financial advice. Crypto assets are volatile and you can lose all the money you invest. See our risk disclaimer.