Candlestick chart

A candlestick chart is a price chart in which each bar, or candle, records four prices for a chosen period: the open, the close, the highest traded price and the lowest. The rectangular body spans the open and the close; thin lines above and below, called wicks or shadows, extend to the high and the low. Shading or colour marks whether the close finished above or below the open. The period is whatever the chart is set to — a minute, an hour, a day or a month.

A worked example

Suppose a hypothetical share opens a session at 50, trades as high as 53 and as low as 49, and closes at 52. The candle's body runs from 50 to 52, a span of 2. The upper wick covers the distance from 52 to 53, a span of 1, and the lower wick runs from 49 to 50, also 1. Because the close sits above the open, the candle is drawn as a rising one.

A candlestick records what price did and nothing else. It does not say why buyers or sellers acted as they did, and it carries no information about what the next candle will contain.