Lesson 27 of 53
What a single candle shows
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A candlestick is a compressed story of one slice of time. On a 1-hour chart, each candle summarises everything that happened in that hour using only four prices: the open, the high, the low and the close.
The four prices
- Open — the first traded price of the period.
- High — the highest price reached during the period.
- Low — the lowest price reached during the period.
- Close — the last traded price before the period ended. This is the most important of the four.
Body and wick
The thick rectangle is the body: it spans from the open to the close and shows the price ground that one side actually held onto. The thin lines above and below are the wicks (also called shadows or tails): they show where price travelled and was pushed back from.
| What you see | What it means |
|---|---|
| Long body | One side dominated the whole period — strong conviction |
| Short body | Open and close finished close together — indecision |
| Long upper wick | Buyers pushed up and sellers rejected the move |
| Long lower wick | Sellers pushed down and buyers rejected the move |
| No wicks at all | Price ran one way from the first tick to the last |
Remember
A wick is a failure. It marks a price level the market tested and refused to accept — which is exactly why wicks are so useful for spotting turning points.
The timeframe changes the story
One daily candle is made of twenty-four 1-hour candles. A hammer on the 5-minute chart is a five-minute event and carries five minutes of meaning. The higher the timeframe, the more money and more participants a single candle represents — and the more weight the signal deserves.
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