Chart school · lesson 1 of 10

Reading a candle: open, high, low and close

A candle is four prices drawn as one shape. Learn to read one and every chart on this site, and on 777 Raptor, becomes readable.

The 4 drawings Check yourself

The idea

A price chart is a row of candles. Each candle covers one period of time: a minute, an hour, a day. It records where the price started in that period, where it finished, and the highest and lowest prices in between.

That is all a candle holds. It does not record how many people traded, why they traded, or what happens next. Everything in the later lessons is built from these four prices, so it is worth being exact about them.

1.1

The four prices

What it shows: The open is the first price of the period and the close is the last. The high and the low are the extremes reached in between. The body spans open to close. The thin lines above and below it are the wicks, also called shadows.
How traders use it: The close gets the most attention, because it is the price both sides accepted when the period ended. The wicks show prices that were tried and then left.
A common mistake: Reading a candle before it has closed. Until the period ends, the close is still moving and the shape can change completely in the last few seconds.

Candlestick, in the glossary

1.2

A rising candle and a falling candle

What it shows: A rising candle closes above its open. A falling candle closes below it. On these pages a rising candle is green and drawn in outline, and a falling candle is red and drawn solid, so the two differ by more than colour.
How traders use it: Rising candles are called bullish and falling candles bearish. The words describe that one period only. They say who finished ahead, not who will be ahead next.
A common mistake: Assuming the colours mean the same everywhere. Platforms let you change them, and some charts use white and black. Check which end of the body is the open before reading anything.

Japanese candlestick, in the glossary

1.3

What the body and the wicks record

What it shows: A long body means the price finished far from where it started. A small body means it finished close to where it started, however far it travelled. A long wick marks a price that was reached and then given up within the same period.
How traders use it: A long body is read as one side being in control for that period. Long wicks are read as rejection: the price went there and was pushed back. A small body with long wicks is read as a contest nobody won.
A common mistake: Treating one candle as a verdict. The same shape means little in a quiet market and more after a long run. Size only matters compared with the candles around it.

1.4

Timeframes

What it shows: The timeframe is the period each candle covers. Four one-hour candles and one four-hour candle describe the same four hours. The larger candle takes the first open, the last close, the highest high and the lowest low.
How traders use it: A longer timeframe shows the broad direction with less noise. A shorter one shows detail. Many traders look at a longer timeframe first for direction and a shorter one for timing.
A common mistake: Jumping between timeframes until one of them agrees with what you hoped to see. Choose the timeframes before you look, and keep to them.

The Scale lab: one market at many timeframes

SimulationEvery drawing is invented to show a shape as plainly as possible. None of them is a market, and a real chart is rarely this tidy. Educational information, not investment advice or a recommendation to trade.

To carry away

Lesson 1, in four lines.

01
A candle is four prices: open, high, low, close. Nothing else is in it.
02
The body is the distance from open to close. The wicks are the prices tried and left.
03
Wait for the close. An unfinished candle has not decided its shape.
04
The same four hours can be one candle or four. The timeframe is a choice you make.

Check yourself

Three questions on this lesson.

Choose an answer and press Check. You can try each as often as you like. No answer is stored, nothing is sent anywhere and no score is kept.

Question 1 of 3
A candle closes above its open. What is it called?
A rising, or bullish, candleA falling, or bearish, candleA doji
Question 2 of 3
What does the top of the upper wick mark?
The closeThe highest price of the periodThe price at which most trading happened
Question 3 of 3
Four one-hour candles are combined into one four-hour candle. Where is its close?
At the highest of the four closesAt the average of the four closesAt the close of the fourth candle

An explanation for study. It is not advice, a recommendation or a forecast. No pattern is reliable on its own, and a shape described here says nothing certain about what a price will do next.

Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose.

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Fetching the page

The idea of this lesson

Lesson 1, in four lines.

Three questions on this lesson.

The idea of this lesson

Lesson 1, in four lines.

Three questions on this lesson.