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How to Read Candlestick Charts Without Guessing

Every candle on a chart is four prices drawn as one shape. Once you can read open, high, low and close, the chart stops looking like noise. Here's how candles work, a few you'll see often, and why one candle on its own tells you very little.

Written By

Karolina Hansen

Updated 26/10/2026 · 7 min read

GoldForex

Key Takeaways

Each candle shows four prices for one period of time: open, high, low and close.
The body runs from open to close. The wicks show how far price reached beyond that before coming back.
Colour tells you direction. Usually green (or white) closed higher than it opened and red (or black) closed lower.
A single candle only describes what happened. Where it forms, and what came before it, matters far more than its shape.

Open any trading chart and you'll almost certainly see candlesticks. They look complicated at first, but each one is just a picture of what price did over a set period. A one-hour candle shows one hour, a daily candle shows one day. Learn to read one properly and you can read the whole chart.

Four Prices in One Shape

Open

The price at the start of the period.

High

The highest price reached during the period.

Low

The lowest price reached during the period.

The price at the end of the period.

Take one hourly gold candle. It opens at 4,002, dips to 3,998, climbs as high as 4,011 and closes the hour at 4,008. Those four numbers are the whole candle. You'll often see them written as OHLC.

Bodies and Wicks

The thick part of the candle is the body. It runs between the open and the close. The thin lines above and below are the wicks (some people call them shadows). They show the prices that were reached during the period but didn't hold by the close.

One hourly gold candle broken into parts: open 4,002, high 4,011, low 3,998, close 4,008

Upper wick (4,008 to 4,011)$3

Body (4,002 to 4,008)$6

Lower wick (3,998 to 4,002)$4

Full range (3,998 to 4,011)$13

Illustrative example. Closed above its open, so this is an up candle with a $6 body inside a $13 range.

Up candle

Close above open

Usually green or white
Open at the bottom of the body, close at the top

Down candle

Close below open

Usually red or black
Open at the top of the body, close at the bottom

Colours are just a setting. If your platform uses different ones, check which way round they are before you read anything into a chart.

A long body means price moved a good distance in one direction and stayed there. A long wick means price went somewhere and then got pushed back. A long lower wick, for example, tells you sellers drove price down during the period and buyers brought it back up before the close.

A Few Candles You'll See Often

Doji

Open and close are almost the same, so the body is tiny. Neither side won the period.

Hammer (pin bar)

Small body near the top, long lower wick. Price was pushed down and then rejected back up.

Shooting star

Small body near the bottom, long upper wick. Price was pushed up and then rejected back down.

Engulfing

A two-candle shape. The second body completely covers the first, in the opposite colour.

You'll find books with dozens of named patterns. I wouldn't try to memorise them. If you understand what the body and wicks are telling you, you can read any candle, named or not.

Why One Candle Isn't a Signal

A hammer in the middle of nowhere doesn't mean much. A hammer at a level where price has turned before, after a long fall, is worth paying attention to. The candle's shape is the same in both cases. What changes is where it formed and what led up to it. That's why a candle on its own isn't a reason to trade.

Five hourly gold candles: close minus open

Candle 1+$6

Candle 2−$3

Candle 3+$2

Candle 4−$8

Candle 5+$4

Illustrative example. Three up candles and two down, yet overall price finished $1 above where it started. Looking at any single candle would give you a different story.

Where is this candle? Near a level price has reacted to before, or in open space?
What came before it? A long move, or sideways chop?
Which timeframe is it on? A daily candle carries more weight than a five-minute one.
Did the next candle follow through, or did it cancel the first one out?

A candle can look completely different while it's still forming. Until the period closes, the shape can change. Wait for the close before you read anything into it.

How to Practise Reading Them

Pick one market and one timeframe

Gold on the one-hour chart is fine. Sticking to one stops you comparing apples and pears.

Read candles out loud

For each one, say what happened: where it opened, how far it went, where it got pushed back, where it closed.

Add the context

Then ask where it sits. Near a recent high or low? After a run up or down?

Write down what you notice

A few notes a day builds your eye far faster than reading about patterns.

Reading too much into single candles is one of them. See the other six before they cost you.

Download the free 7 Mistakes guide

Keep chart notes in your journal, build your plan and work through the next lessons in your dashboard.

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Frequently Asked Questions

Usually green or white means the candle closed higher than it opened, and red or black means it closed lower. Platforms let you change the colours, so check your settings.

Price reached that level during the period but couldn't stay there by the close. A long lower wick shows price was pushed back up, a long upper wick shows it was pushed back down.

No. If you understand bodies and wicks you can read any candle. Learning where a candle forms is more useful than learning lots of pattern names.

Educational content only, not financial advice. Trading involves risk, and past performance does not guarantee future results.

Continue learning

Price Action Trading: Reading the Chart Without IndicatorsThe basics of price action trading. How to read the market without indicators and base your decisions on what price is actually doing.

Also worth reading: Risk Management Basics: Decide What You Can Lose Before You Trade · What Is Liquidity in Trading?