Anatomy of Candlestick
Candlesticks pack four pieces of information into a visual format. Understanding their anatomy is essential for technical analysis.
Candlestick charting originated in 18th century Japan for rice trading. They've been used by traders for over 200 years.
The Four Components
Each candlestick shows:
| Component | What It Represents |
|---|---|
| Open | First trade price of the period |
| High | Highest price reached |
| Low | Lowest price reached |
| Close | Last trade price of the period |
The Body
The thick part of the candlestick is the body.
Bullish Candle (Price went up):
- Body is usually green or white
- Bottom of body = Open price
- Top of body = Close price
- Close is higher than Open
Bearish Candle (Price went down):
- Body is usually red or black
- Top of body = Open price
- Bottom of body = Close price
- Close is lower than Open
The Wicks (Shadows)
The thin lines above and below the body are wicks or shadows.
Upper Wick:
- Shows how high the price went
- Price tested higher but came back
- Long upper wick = Selling pressure at highs
Lower Wick:
- Shows how low the price went
- Price tested lower but recovered
- Long lower wick = Buying pressure at lows
Long wicks show rejection. If price tried to go higher but couldn't hold, that level becomes potential resistance.
Body Size Meaning
| Body Size | Interpretation |
|---|---|
| Long body | Strong conviction, momentum |
| Short body | Indecision, weak move |
| No body (doji) | Open equals close, major indecision |
Wick Size Meaning
| Wick Size | Interpretation |
|---|---|
| Long upper, short lower | Sellers took control |
| Long lower, short upper | Buyers took control |
| Long both sides | High volatility, indecision |
| No wicks | Strong conviction from open to close |
Special Candlestick Types
Marubozu (No Wicks)
- Full body with no shadows
- Extremely strong conviction
- Bullish marubozu = Very bullish
- Bearish marubozu = Very bearish
Doji (Open = Close)
- Very small or no body
- Long wicks possible
- Indicates indecision
- Often signals potential reversal
A single candle doesn't predict the future. The context – where it appears and what comes before – matters more.
Spinning Top
- Small body
- Wicks on both sides
- Indecision, potential reversal
- Less extreme than doji
Reading the Story
Each candle tells a story:
Long green candle: Buyers dominated the entire session.
Green candle with long upper wick: Buyers pushed higher, but sellers pushed back. Some caution.
Doji after uptrend: Indecision after buyers were in control. Watch for reversal.
Practice Reading
Look at any candle and ask:
- Who won – buyers or sellers? (Body color)
- How strong was the conviction? (Body size)
- Was there rejection at highs or lows? (Wick length)
- Overall sentiment? (Combine the analysis)
Key Takeaways
- Body shows the open-to-close range
- Wicks show the full range and rejection
- Color indicates if price moved up or down
- Size indicates conviction
- Context matters more than single candles
Next: Now let's learn specific bullish patterns that signal potential upside.
Sources & Disclaimer
- Standard Market Conventions for Technical Analysis
- BSE/NSE Charting and Analysis Guides
Note: Any benchmarks (e.g., "Good ROE is > 20%", or specific P/E ranges) are simplified industry heuristics for educational purposes. True evaluation depends on specific industry context, market cycles, and individual company circumstances.