Candlestick
A candlestick is a graphical summary of price movement during one period, such as an hour or a day. In a single shape it shows four prices: where the period opened, its high, its low and where it closed.
The parts of a candlestick
The body is the thick rectangle between the open and the close. The wicks, also called shadows, are thin lines above and below the body. The top of the upper wick marks the highest price of the period, and the bottom of the lower wick marks the lowest.
The colour tells you the direction. On most platforms a green candle closed higher than it opened, and a red candle closed lower. Some charts use hollow and filled candles instead.
What the shape tells you
A long body with short wicks means price moved firmly in one direction and stayed there. A tiny body with long wicks on both sides means price swung up and down but ended near its starting point, which traders read as indecision.
A long upper wick shows that price rose during the period but sellers pushed it back down before the close. A long lower wick shows the opposite: a dip that buyers bought.
An example
Imagine a one-hour candle for a coin that opens at 50, drops to 46, climbs to 51 and closes at 50.5. It is a small green body from 50 to 50.5, with a long lower wick down to 46 and a short upper wick to 51. The story: sellers pushed hard early in the hour, buyers absorbed it, and the hour ended slightly up.
Limits to keep in mind
A candle compresses a whole period into four numbers. It does not show the order in which the high and low happened, how much was traded at each price, or why the move occurred.
The same move also looks different depending on the timeframe. One daily candle can contain 24 very different hourly candles. Single candles and named candle patterns are best treated as context, not as signals that reliably predict the next move.
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Frequently asked questions
What do the four prices on a candlestick mean?
Open is the first traded price of the period, close is the last, high is the highest and low is the lowest. Together they are often abbreviated OHLC.
What is the difference between a candlestick and a candlestick chart?
A candlestick is one candle for one period. A candlestick chart is the full series of candles placed side by side over time.
Does a green candle mean the price went up overall?
It means the close was above the open for that period only. The price can still be lower than the previous candle's close, or in a longer downtrend.
Related terms
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