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How to read a single candlestick

Simple free stock charts tips to improve results of your stock market strategies

Every single candlestick can provide you with a lot of useful information. You can use them to predict what could happen in the future.

Price and behavior analysis

Candlesticks can be painted on different types of charts. They are used on long term charts like daily, weekly or monthly but also on intraday charts by daytraders.

The information provided by these candles is the same on all types of charts.

price info from candlestick

These shapes provide these price levels:

Open - first price in a specific period of time
Close - last price in a specific period of time
High - highest price in a specific period of time
Low - lowest price in a specific period of time

Period of every single candle is based on time period of every individual chart. Intraday realtime charts are often based on 1-minute, 5-minute, 15 or 30-minute periods or sometime also hourly and 4 hours periods. Longer time frames are bases on daily, weekly or monthly periods.

And these main behavior levels could be found there:

Buy
The candle is white, positive. That means the closing price is higher than the opening price. There are much more buying pressure in specified period and it moved price up. Buyers were in charge and it can confirm broader positive situation
Sell
The candle is black, negative. That means the closing price is lower than the opening price. Sellers were in action and they pushed price down. It could confirm negative chart situation.

My stock market trading tip

You can define any color for positive and for negative candlesticks any way you want. I personally use green=positive and red=negative as you can see on a lot of candle charts examples on this site.

Shape info

Shape tells you about the strength of emotions on the stock market.

Long body candles

A candle with a long body means strong buying interest (positive) or selling interest (negative)

long body candlestick

Short body candles

A candle with a short body means indecision. Buyers and sellers cannot win over each other. The last example below is known as a doji.

Hammer

A type of candle with a short body and a long tail means a possible change in behavior. If you find this kind of candle after several days of decline, then it indicates the decline might be over or will pause. The same applies for several positive days.

hammer candlestick

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