Candlestick Chart
A candlestick chart is a price chart that shows each time period as a candle, displaying the open, high, low and close prices for that period. It is the default chart on most crypto exchanges and trading platforms.
How a candlestick chart is built
The horizontal axis is time and the vertical axis is price. The chart is split into equal periods, such as one hour or one day, and each period becomes one candle. Placed side by side, the candles show how price moved over time in more detail than a simple line.
Each candle has a body, the thick part between the opening and closing price, and wicks, the thin lines that reach up to the highest price and down to the lowest price of that period.
Reading the colours
If the price closed higher than it opened, the candle is usually shown in green (or hollow); if it closed lower, in red (or filled). Colours can be changed in most platforms, so always check the legend.
A long green body means buyers pushed price up strongly during the period. A small body with long wicks means price swung around but ended near where it started, a sign of indecision.
An example
On a daily chart, say one candle opens at 100, rises to 112, falls to 97 and closes at 108. It is a green candle with a body from 100 to 108, an upper wick to 112 and a lower wick to 97. Within that one shape you can see the full range of the day and that buyers had the upper hand by the close.
History and limits
Candlestick charting is traditionally traced to Japanese rice traders in the 18th century and was popularised in the West in the early 1990s, notably through the work of Steve Nison.
Candles summarise price, but they hide what happened inside each period and say nothing about why. Named candle patterns can be useful context, yet on their own they are unreliable predictors. Combining candles with volume and the bigger trend, and checking more than one timeframe, gives a fuller picture.
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Frequently asked questions
What do green and red candles mean?
By default, green means the period closed above its open and red means it closed below. The colours are a display setting and can differ between platforms.
What timeframe should I use on a candlestick chart?
It depends on your goal. Short timeframes such as 5 minutes show more noise; daily or weekly candles show the broader trend. Many people check several.
Are candlestick patterns reliable?
They describe what buyers and sellers did, but they do not reliably predict the next move on their own. Context such as trend, volume and key price levels matters more.
Related terms
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