MARKET ANALYSIS · Beginner · 7 min read · 3 Nov 2026 · Navion Pro Research
How to Read a Candlestick Chart
A candlestick chart packs four prices into one simple shape. Once you can read a single candle, you can read the story of a whole trading session at a glance. This guide shows you how.
Trading leveraged products carries a high level of risk to your capital. Losses can exceed deposits. Past performance is not an indicator of future results.
Key Points
- Each candle shows four prices for one period: where the price opened, its highest point, its lowest point and where it closed.
- The body shows the gap between the open and the close. The wicks show how far the price travelled beyond them.
- The colour tells you the direction: a rising candle closed above its open, a falling candle closed below it.
- Candle shapes hint at who was in control, buyers or sellers. They are clues to weigh, not signals to follow blindly.
What a candle shows
Every candle covers one period of time, such as 1 hour or 1 day. In that period, the price does four things that matter:
- Open. The first price traded in the period.
- High. The highest price reached.
- Low. The lowest price reached.
- Close. The last price traded before the period ended.
A line chart joins up only the closing prices. A candle keeps all four, so you can see how much the price moved within the period, not just where it finished.
Body, wicks and colour
The body is the thick part of the candle. It runs from the open to the close. A long body means the price moved a long way between the start and the end of the period. A short body means it finished close to where it started.
The wicks are the thin lines above and below the body. The top of the upper wick marks the high. The bottom of the lower wick marks the low. A long wick shows the price reached a level but could not hold it.
The colour shows the direction. Most platforms show a rising candle in green or white and a falling candle in red or black. You can usually change these colours in your chart settings.
| Part | What it shows | What it can suggest |
|---|---|---|
| Long body | A big move from open to close | One side was firmly in control |
| Short body | Little change from open to close | Buyers and sellers were evenly matched |
| Long upper wick | Price rose, then fell back | Sellers pushed back at higher prices |
| Long lower wick | Price fell, then recovered | Buyers stepped in at lower prices |
An example: reading one candle
This example is for illustration only.
A 1 hour candle on gold opens at $3,900. During the hour, gold rises to $3,922 and dips to $3,895. It closes at $3,915.
- The close is above the open, so this is a rising candle.
- The body runs from $3,900 to $3,915, a move of $15.
- The upper wick runs from $3,915 to $3,922. Gold reached $3,922 but sellers pushed it back $7 before the hour ended.
- The lower wick runs from $3,900 to $3,895. The dip was small and quickly bought.
One candle tells you the result of the period and how hard each side fought along the way.
Timeframes: one candle, many periods
The same market looks different depending on the timeframe you choose. On a 5 minute chart, each candle covers 5 minutes. On a daily chart, each candle covers a full trading day.
Shorter timeframes show more detail and more noise. Longer timeframes show the bigger picture and move more slowly. Many traders look at a longer timeframe first to see the main direction, then a shorter one to plan their entry.
Five candle shapes worth knowing
| Shape | What it looks like | What it can suggest |
|---|---|---|
| Strong candle | A long body with short wicks | Firm buying or selling through the whole period |
| Doji | Almost no body, wicks on both sides | Indecision: the price closed near where it opened |
| Hammer | A small body near the top, a long lower wick | After a fall, buyers pushed the price back up |
| Shooting star | A small body near the bottom, a long upper wick | After a rise, sellers pushed the price back down |
| Engulfing | A candle whose body covers the whole body of the one before | A possible change in who is in control |
A pattern, not a rule.
Reading candles with care
- Look at where the candle forms. A hammer means more at a level where the price has turned before than in the middle of nowhere.
- Wait for the candle to close. Until the period ends, the shape can still change.
- Check the timeframe. A shape on a 1 minute chart carries far less weight than the same shape on a daily chart.
- Use more than one clue. Candles work best alongside other tools, such as support and resistance or the trend.
Risk disclosure: Trading involves significant risk of loss and is not suitable for all investors. Past performance is not indicative of future results. This brief is for information and education only. It is not investment advice, a recommendation or an instruction to buy or sell anything. The likely market reactions described here are our assessments of what could happen, not predictions, and markets can and often do move differently. Figures and forecasts come from third party sources and may change. Make your own decisions, and consider independent advice if you are unsure.
