Technical analysis · updated October 21, 2026
How to read a Japanese candlestick chart
A candlestick chart shows four prices for each day (or hour, or week): the open, the close, the high and the low. Each day is a "candle": a rectangle (the body) with two wicks, one above and one below.
How it works
The body is the rectangle between the opening and the closing price. The colour tells you the direction: green (or white) when the close is above the open, so the price rose that day; red (or black) when the close is below the open. The wicks are the thin lines above and below: the tip of the upper wick is the day's highest price, the end of the lower wick the lowest. A long body shows a day with a clear direction; a very small body with long wicks shows a day of indecision.
Worked example
A stock opens at $100, climbs to $106, drops to $98 and closes at $104.
The candle is green, with a $4 body, a $2 upper wick and a $2 lower wick.
Worth knowing
Some shapes have names: the "doji" (almost no body, indecision), the "hammer" (small body at the top and a long lower wick, after a fall). They describe what happened; they do not guarantee what comes next.
When a candlestick chart can fool you
Reversed colours: some platforms use red for a rise (in parts of Asia, for example). Check the legend. A single candle says little; the context matters: the trend, the volume and the support and resistance levels.
Related terms
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Questions about a candlestick chart
What does a red candle mean?
That the closing price was below the opening price: that day the stock fell compared with how the day started.
What do long wicks show?
That the price rose or fell a lot during the day but came back by the close. A long lower wick shows that buyers stepped in after a fall.
These explanations are for information only. They are not a recommendation to buy or sell.
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