Forex Candlesticks
A candlestick packs four prices and a short story into one shape. Once you can read a single candle, you can read the tug of war between buyers and sellers on any chart, in any market, on any timeframe.
Anatomy of a Candle
Every candle shows four prices for one period (one minute, one hour, one day, and so on):
| Part | What it is |
|---|---|
| Open | The first price of the period |
| Close | The last price of the period |
| High | The highest price reached; the top of the upper wick |
| Low | The lowest price reached; the bottom of the lower wick |
| Body | The thick part between the open and the close |
| Upper wick (shadow) | The thin line from the top of the body up to the high |
| Lower wick (shadow) | The thin line from the bottom of the body down to the low |
Upper wick = High − max(Open, Close)
Lower wick = min(Open, Close) − Low
Range = High − Low
Example: Measuring a candle
EUR/USD H1 candle Open 1.0850 High 1.0875 Low 1.0842 Close 1.0868 Body: 1.0868 − 1.0850 = 18 pips (close > open → bullish) Upper wick: 1.0875 − 1.0868 = 7 pips Lower wick: 1.0850 − 1.0842 = 8 pips Range: 1.0875 − 1.0842 = 33 pips (18 + 7 + 8 = 33 ✓)
Bullish vs Bearish Candles
Bullish candle
Close is above the open. Usually green (or white/hollow). Read it bottom to top: open at the bottom of the body, close at the top.
Buyers won this period.
Bearish candle
Close is below the open. Usually red (or black/filled). Read it top to bottom: open at the top of the body, close at the bottom.
Sellers won this period.
Note: Colours are just a platform setting. Some traders use white/black or blue/red. Always check the open and close, not only the colour.
Long Bodies vs Short Bodies
The body shows how much price moved from open to close. It tells you how strong the winning side was.
- Long body: one side was in strong control. A long green body shows strong buying; a long red body shows strong selling.
- Short body: neither side made much progress. The market is unsure, resting or about to change.
- No body (open ≈ close): a doji. Perfect balance between buyers and sellers.
Tip: Compare a candle to the candles before it. A 20-pip body is huge on an M15 chart but tiny on a daily chart. "Long" and "short" are always relative. The ATR indicator measures what "normal" size is.
What Wicks Tell You
A wick shows where price went but could not stay. It is a sign of rejection.
- Long upper wick: buyers pushed price up, but sellers pushed it back down before the close. Selling pressure at higher prices.
- Long lower wick: sellers pushed price down, but buyers pushed it back up before the close. Buying pressure at lower prices.
- Long wicks on both sides: a big fight with no winner. Indecision.
- No wicks: price opened at one extreme and closed at the other. One side was in total control.
Example: Reading the long lower wick
Open 1.0852 High 1.0855 Low 1.0821 Close 1.0850 Body: 1.0852 − 1.0850 = 2 pips (tiny, slightly bearish) Lower wick: 1.0850 − 1.0821 = 29 pips Upper wick: 1.0855 − 1.0852 = 3 pips Range: 1.0855 − 1.0821 = 34 pips
The lower wick is about 85% of the whole range (29 ÷ 34). Sellers tried hard, and buyers rejected every price below 1.0850. After a fall, this can be an early warning that the selling is running out.
Warning: One candle is never a trade signal on its own. A wick means much more when it forms at a key level, like support or resistance, and when the next candle confirms it.
Reading the Story of a Candle
Try to describe each candle as a short story: where did it open, where did it go, and where did it end up?
| Shape | The story | Who is in control? |
|---|---|---|
| Long green body, small wicks | Opened low, rose steadily, closed near the high | Buyers, strongly |
| Long red body, small wicks | Opened high, fell steadily, closed near the low | Sellers, strongly |
| Small body, long lower wick | Dropped hard, then recovered almost fully | Buyers took back control |
| Small body, long upper wick | Rallied hard, then fell back | Sellers took back control |
| Small body, wicks both sides | Moved up and down, ended where it started | Nobody: indecision |
Where the Close Sits
A simple way to judge a candle is to ask: where did it close within its range?
- Close in the top third (above ~67%): bullish pressure.
- Close in the bottom third (below ~33%): bearish pressure.
- Close in the middle: balance.
Example
GBP/USD: High 1.2740, Low 1.2700, Close 1.2734
Close position = (1.2734 − 1.2700) ÷ (1.2740 − 1.2700) × 100
= 0.0034 ÷ 0.0040 × 100 = 85%
The candle closed in the top part of its range: buyers were in control at the close.
Info: The close of a candle only becomes final when the period ends. A candle that looks bullish with ten minutes left on the H1 chart can still turn red. Wait for the close before you judge it.
In the next lesson, Candlestick Patterns, you will put these ideas together into named patterns like the hammer, engulfing and morning star.
Test Yourself With Exercises
A candle opens at 1.0900 and closes at 1.0880. What kind of candle is it?
- Bullish
- Bearish
- Doji
A candle has O 1.0850, H 1.0890, L 1.0845, C 1.0855. How long is its upper wick?
- 40 pips
- 5 pips
- 35 pips
- 45 pips
What does a long lower wick suggest?
- Sellers pushed lower but buyers pushed price back up
- Sellers are fully in control
- The market was closed
What is a doji?
- A candle with no wicks
- A candle where open and close are almost equal
- A very long green candle
USD/JPY candle: High 150.80, Low 150.00, Close 150.20. Where did it close in its range?
- 75% (top quarter)
- 50% (middle)
- 25% (bottom quarter)