Intuition The Big PictureA candlestick is a compressed story of a battle between buyers (bulls) and sellers (bears) over one time period (a day, an hour, 5 minutes — whatever your chart is set to). Instead of one number, it packs four prices into a single shape so your eye can read momentum instantly.
WHY it exists: A line chart shows only closing prices — it hides the fight that happened inside the period. A candlestick shows where price opened , how high it flew, how low it crashed, and where it closed . That extra information is where trading edges live.
Definition The Four Prices (OHLC)Every candle encodes exactly four numbers for its time period:
Open (O O O High (H H H Low (L L L Close (C C C
By definition L ≤ O ≤ H L \le O \le H L ≤ O ≤ H L ≤ C ≤ H L \le C \le H L ≤ C ≤ H
Definition The Two Parts of the Shape
The body = the thick rectangle between Open and Close . It shows the net movement.
The wicks (also called shadows or tails ) = the thin lines above and below the body, reaching to the High and Low . They show the rejected extremes.
The body is the distance from where price started to where it finished . If it finished higher, buyers won the period → bullish candle (usually green/white). If it finished lower, sellers won → bearish candle (usually red/black).
Intuition What a long wick meansA long upper wick means price shot up but sellers slammed it back down → buyers were rejected at the top. A long lower wick means price dropped but buyers pushed it back up → sellers were rejected at the bottom. Wicks are "footprints of a failed attack."
Worked example Example 1 — A strong bullish candleData: O = 100 O=100 O = 100 H = 112 H=112 H = 112 L = 99 L=99 L = 99 C = 110 C=110 C = 110
Body = ∣ 110 − 100 ∣ = 10 =|110-100|=10 = ∣110 − 100∣ = 10 Why? Close > Open so bullish; net gain of 10.Upper wick = H − max ( O , C ) = 112 − 110 = 2 = H-\max(O,C)=112-110=2 = H − max ( O , C ) = 112 − 110 = 2 Why max \max max Top of body is the Close (110), the higher of the two.Lower wick = min ( O , C ) − L = 100 − 99 = 1 =\min(O,C)-L=100-99=1 = min ( O , C ) − L = 100 − 99 = 1 Why? Bottom of body is the Open (100).Range = 112 − 99 = 13 =112-99=13 = 112 − 99 = 13 2 + 10 + 1 = 13 2+10+1=13 2 + 10 + 1 = 13 Read: Big green body, tiny wicks → buyers dominated with almost no pushback. Strong momentum.
Worked example Example 2 — A bearish candle (test the max/min trick)Data: O = 110 O=110 O = 110 H = 113 H=113 H = 113 L = 95 L=95 L = 95 C = 100 C=100 C = 100
Bearish because C < O C<O C < O = ∣ 100 − 110 ∣ = 10 =|100-110|=10 = ∣100 − 110∣ = 10
Upper wick = 113 − max ( 110 , 100 ) = 113 − 110 = 3 =113-\max(110,100)=113-110=3 = 113 − max ( 110 , 100 ) = 113 − 110 = 3 Why? Body top is the Open now.
Lower wick = min ( 110 , 100 ) − 95 = 100 − 95 = 5 =\min(110,100)-95=100-95=5 = min ( 110 , 100 ) − 95 = 100 − 95 = 5
Range = 113 − 95 = 18 =113-95=18 = 113 − 95 = 18 3 + 10 + 5 = 18 3+10+5=18 3 + 10 + 5 = 18
Worked example Example 3 — Hammer (story from anatomy alone)Data: O = 50 O=50 O = 50 H = 51 H=51 H = 51 L = 42 L=42 L = 42 C = 49 C=49 C = 49
Body = ∣ 49 − 50 ∣ = 1 =|49-50|=1 = ∣49 − 50∣ = 1
Upper wick = 51 − 50 = 1 =51-50=1 = 51 − 50 = 1
Lower wick = 50 − 42 = 8 =50-42=8 = 50 − 42 = 8 huge .
Read: Sellers dragged price all the way to 42, then buyers rejected them and closed near the top. Long lower wick + small body = potential reversal signal. You derived a famous pattern just from anatomy .
Common mistake Steel-manning the classic errorsMistake A: "Green means price went up compared to yesterday's close."
Why it feels right: We're used to daily % changes vs the previous day. The fix: Candle color compares Close vs its own Open , not vs yesterday. A candle can be green while still lower than yesterday's close.
Mistake B: "The top of the candle is the Close."
Why it feels right: On a green candle the Close is the body-top. The fix: The top of the whole candle is always the High (tip of the upper wick). The body top is max ( O , C ) \max(O,C) max ( O , C )
Mistake C: "A long wick means a big price move — strong."
Why it feels right: Long = far = powerful. The fix: A long wick means the move was rejected/reversed , i.e. it failed . A long body means strength; a long wick means weakness at that extreme.
Recall Active Recall — cover the answers
What are the four prices a candle stores? … O , H , L , C O, H, L, C O , H , L , C
Formula for body size? … ∣ C − O ∣ |C-O| ∣ C − O ∣
Formula for upper wick? … H − max ( O , C ) H-\max(O,C) H − max ( O , C )
What does a long lower wick tell you? … sellers pushed price down but buyers rejected them → possible bullish reversal.
Prove Range = wicks + body. … telescoping cancellation of O O O C C C
Recall Feynman: explain to a 12-year-old (hidden)Imagine a tug-of-war during recess. The body of the candle shows where the rope ended up compared to where it started — if the buyers' side won, the box is green; if the sellers' side won, it's red. The wicks are the marks where the rope was yanked really far one way but then dragged back. A long tail at the bottom means "the sellers almost won, then the buyers snapped it back!" So by looking at one little candle, you can tell who won the fight and who tried hard but lost .
"Body = Battle result, Wick = Wasted attack."
And for the fours: OHLC = "Open, High, Low, Close" → "O pens H igh, L oses C lose" to fix the order.
What four prices does a single candlestick encode? Open, High, Low, Close (OHLC).
What is the "body" of a candle? The thick rectangle between the Open and the Close.
What are wicks/shadows? The thin lines from the body to the High (upper wick) and to the Low (lower wick).
Formula for body size? ∣ C − O ∣ |C-O| ∣ C − O ∣ (absolute difference of Close and Open).
Formula for the upper wick length? H − max ( O , C ) H-\max(O,C) H − max ( O , C ) .
Formula for the lower wick length? min ( O , C ) − L \min(O,C)-L min ( O , C ) − L .
When is a candle bullish (green)? When Close > Open.
When is a candle bearish (red)? When Close < Open.
What is a Doji? A candle where Open = Close, so the body is (near) zero → market indecision.
What does a long lower wick signal? Sellers pushed price down but buyers rejected it → possible bullish reversal.
What does a long upper wick signal? Buyers pushed price up but sellers rejected it → possible bearish reversal.
Prove Range = upper + body + lower. ( H − C ) + ( C − O ) + ( O − L ) = H − L (H-C)+(C-O)+(O-L)=H-L ( H − C ) + ( C − O ) + ( O − L ) = H − L ; O and C cancel telescopically (for red, swap O and C).
Why does a long body mean strength but a long wick mean weakness? Body = net move that held; wick = an extreme that was rejected/reversed.
Top of the whole candle is which price? The High (tip of the upper wick), not the Close.
Intuition Hinglish mein samjhoDekho, ek candlestick basically ek chhoti si kahani hai jo batati hai ki us time period (1 din, 1 ghanta, 5 minute) mein buyers aur sellers ke beech kya ladai hui. Isme char prices hoti hain — Open (shuru ka bhaav), High (sabse upar), Low (sabse neeche), aur Close (aakhri bhaav). Line chart sirf closing dikhata hai, par candle poora "battle" dikhata hai — isiliye traders ko candle zyada pasand hai.
Candle ke do hisse hote hain. Body yaani woh mota rectangle — yeh Open aur Close ke beech ka distance hai. Agar Close upar (Close > Open) toh candle green/bullish, matlab buyers jeet gaye. Agar Close neeche toh red/bearish, sellers jeete. Formula simple: Body = ∣ C − O ∣ =|C-O| = ∣ C − O ∣ Wicks (ya shadows/tails) woh patli lines hain jo body se High aur Low tak jaati hain. Upper wick = H − max ( O , C ) =H-\max(O,C) = H − max ( O , C ) = min ( O , C ) − L =\min(O,C)-L = min ( O , C ) − L max \max max min \min min
Ab important intuition: lambi body = strength , lekin lambi wick = weakness/rejection . Maan lo lower wick bahut lambi hai — matlab price neeche gaya tha par buyers ne usse wapas upar dhakel diya, sellers "reject" ho gaye. Yeh reversal ka signal ho sakta hai (Hammer pattern). Ek quick check yaad rakho: upper wick + body + lower wick = = = − - −
