Candlestick chart
Family VI · Charts & indicators
Not to be confused with candlestick, bar chart, candlestick pattern.
Candlestick chart is a chart type in which each period is drawn as a single candle: a rectangular body spanning the open and close, plus thin lines (wicks or shadows) extending to the period's high and low. The body's colour or fill indicates whether the close finished above or below the open. Because four prices are encoded in one shape, the chart shows range and direction simultaneously rather than a single value per period.
How a candle is constructed
Each candle corresponds to one time interval, such as one minute, one day or one week. The interval's four prices are mapped as follows:
- Body: the rectangle between the open and the close. A close above the open is typically drawn hollow or in one colour; a close below the open is drawn filled or in another colour. Conventions vary by platform and user settings.
- Upper wick: the line from the top of the body to the period's high.
- Lower wick: the line from the bottom of the body to the period's low.
A long body indicates a large open-to-close move; a short body indicates little net change. Long wicks indicate that price traded well beyond the body during the period but did not hold there.
Worked example
A daily candle for a stock with these prices: open 100.00, high 106.50, low 98.20, close 105.00.
The body occupies 5.00 of the 8.30 range, so roughly 60% of the day's movement was retained from open to close; the remaining 3.30 was given back as wicks.
Timeframes and scaling
The same instrument produces different candles on different intervals. A daily candle aggregates the four prices of the whole session; an intraday candle aggregates only its own slice. Changing the interval changes the shape of every candle but not the underlying trades.
Charts are usually drawn on a linear price axis, though logarithmic scaling is available on many platforms for long-horizon comparisons. Axis choice changes the visual slope of a trend but not the open, high, low and close values themselves.
Often confused with
- candlestick
- The chart type is the whole display of many candles over time, whereas a single candlestick is one period's four-price shape; the visible sign is whether the image shows a sequence of candles along a time axis or just one.
- bar chart
- A bar chart (OHLC bar) encodes the same four prices as a vertical line with two short horizontal ticks for open and close, while a candlestick chart uses a filled or hollow body; the visible sign is the presence of a rectangular body rather than tick marks.
- candlestick pattern
- A candlestick pattern is a named configuration of one or more candles used as a signal, while a candlestick chart is the plotting format itself; the visible sign is whether the term refers to a shape being identified (such as a hammer) or to the chart on which candles are drawn.
See also
- forex technical analysis indicators
- price action
- fundamental analysis
- support and resistance
- technical analysis
- fibonacci