Reading candlestick charts

Each candle covers one time period and shows four prices: open, close, high and low.

The thick body spans open to close. Green means it closed higher than it opened; red means lower. The thin wicks show how far the price stretched before coming back.

Wicks are informative

A long lower wick means sellers pushed the price down and buyers pushed it all the way back — a fight buyers won. Long upper wicks are the reverse.

Volume matters more than most people think

The bars beneath show how much was traded. A large move on low volume involved few participants and reverses easily. The same move on high volume means real conviction.

Zoom out

A crash on the 5-minute chart can be invisible on the weekly. Check a longer timeframe before reacting to anything.

What charts cannot do

Predict. They describe what happened and what other traders are watching. That is useful, and it is not the same as knowing what comes next.