Candlestick Charts

A candlestick chart presents four prices for each interval: open, high, low and close. Its body makes the open-to-close change visible, while the wicks show the interval’s extremes. An interval can be five minutes, one session, a week or another specified period.

The upper wick extends from the higher of open and close to the high. The lower wick extends from the low to the lower of open and close. If an endpoint equals the high or low, that wick has zero length.

Usually green or teal means the close exceeds the same candle’s open. It need not exceed the previous close. For example, yesterday’s close is ₹110, today opens at ₹100 and closes at ₹106: today’s body is bullish, but the close-to-close change is −₹4. Check the platform’s colour convention.

No. Open ₹100, high ₹112, low ₹94 and close ₹108 can arise from different intraperiod paths. The high may occur before or after the low. A candle is a summary and does not disclose every transaction or establish which participant group drove the move.

A doji has open and close at or very near each other. It describes little net movement from open to close even if prices travelled widely within the interval. Define “near” relative to tick size and normal volatility. A doji after a long move can prompt review, but is not an automatic reversal signal.

A hammer has a small real body near the top of its range and a relatively long lower wick. Traders assess it after a decline, where rejection of lower prices may be relevant. A lower wick about twice the body is a common descriptive guide, not a universal rule. Body colour alone does not establish confirmation.

A shooting star has a small body near the lower end of the range and a long upper wick, assessed after an advance. It records an intraperiod rise that was largely surrendered by the close. Continued price strength can invalidate the bearish interpretation.

Similar geometry receives different names and interpretations depending on location. Labels describe possibilities that need additional evidence.

A bullish engulfing sequence has a bearish first body followed by a bullish body that spans it, normally assessed after a decline. Reverse the directions and prior trend for a bearish engulfing sequence. Specify whether equality at a body endpoint qualifies in your rules.

A hammer near a previously marked support zone provides a location-based hypothesis; an engulfing figure near resistance frames another. Compare volume with an appropriate historical baseline. The candle and an indicator calculated from the same prices are not fully independent evidence.

See the illustrated Support and Resistance lesson →

Choose a rule before seeing the result, such as a later close above a hammer’s high or below a shooting star’s low. Confirmation sacrifices early timing and can still fail. Using the next candle to label a setup means the confirmed signal becomes available only after that candle closes.

A line chart often uses only closes. A bar chart and an ordinary candle use OHLC. A weekly candle aggregates that week; it is not an average of daily candle bodies. Arithmetic scales show equal price changes at equal distances; logarithmic scales show equal proportional changes. Synthetic charts such as Heikin-Ashi use transformed values and must not be confused with actual transaction prices.

• Instrument, chart type and interval.
• Valid OHLC data and treatment of corporate actions.
• Preceding trend and nearby zones marked before the outcome.
• A reproducible definition and confirmation rule.
• Invalidation, execution assumptions and costs.