Technical analysisModule 1, lesson 3 of 32
Candlesticks and chart timeframes
How to read the body and wicks of a candlestick, what bullish and bearish candles show, and how one price history looks on daily, weekly and intraday charts.
In this lesson
- Read the body, wicks and colour of a candlestick.
- Explain what long wicks and small bodies describe about a session.
- Explain how one weekly candle summarises several daily candles.
- Choose a timeframe suited to a question and explain why signals differ across timeframes.
Builds on
- Open, high, low and closeA candlestick draws the open, high, low and close explained there.
On this page
In simple terms
A candlestick draws a session's open, high, low and close as a shape that is easy to read at a glance.
- The body is the thick part, running from the open to the close.
- The wicks (or shadows) are thin lines above and below the body, reaching to the high and the low.
- The colour shows direction. A candle that closed above its open is usually drawn green or hollow (bullish); one that closed below its open is red or filled (bearish). Colour schemes vary between charting tools.
Reading the shapes
The shape of a candle summarises the session's battle between buyers and sellers.
| Shape | What happened in the session |
|---|---|
| Long body, short wicks | The price moved strongly in one direction and closed near the extreme |
| Small body, long wicks on both sides | Prices moved a lot both ways but ended near where they started; indecision |
| Long upper wick, small body | Higher prices were reached but rejected; the close was well below the high |
| Long lower wick, small body | Lower prices were reached but rejected; the close was well above the low |
| No body (open equals close) | A doji: no net change despite movement in the session |
These descriptions are accurate; what they mean for the future is much less certain. A long upper wick shows that sellers pushed the price down from its high during that session. Whether that matters for tomorrow depends on context, and even then the evidence is weak, as the candlestick formations lesson explains.
Timeframes
Every candle covers a period: one minute, five minutes, an hour, a day, a week, a month. This is the chart's timeframe. The same price history looks very different depending on the timeframe chosen.
Worked example: Five daily candles combine into one weekly candle
A made-up share, Tapti Fabrics, over one week:
| Day | Open | High | Low | Close |
|---|---|---|---|---|
| Monday | 200 | 206 | 198 | 205 |
| Tuesday | 205 | 210 | 203 | 204 |
| Wednesday | 204 | 205 | 192 | 194 |
| Thursday | 194 | 199 | 190 | 198 |
| Friday | 198 | 212 | 197 | 210 |
| Weekly open (Monday's open) | ₹200 |
|---|---|
| Weekly high (highest of the five) | ₹212 |
| Weekly low (lowest of the five) | ₹190 |
| Weekly close (Friday's close) | ₹210 |
The weekly candle is a rising candle with a body from ₹200 to ₹210 and a lower wick to ₹190. It hides Wednesday's sharp fall, which on the daily chart looked like a breakdown.
Choosing a timeframe
- Longer timeframes (weekly, monthly) smooth out noise and show the bigger picture. Each candle summarises more trading, so signals are fewer and slower.
- Shorter timeframes (intraday) show more detail, but most of what they show is noise: small moves driven by individual orders. They produce many more apparent signals, most of them false.
Two common practices:
- Match the timeframe to your question. Someone considering a holding of several years learns little from five-minute charts.
- Check a longer timeframe for context. A sharp fall on a daily chart may be a small dip within a strong rise on the weekly chart.
Trends, support and resistance also depend on timeframe, as the market structure lesson explains: a share can be in a downtrend on the daily chart and an uptrend on the monthly.
Why it matters
Candlestick charts are the default in most trading apps, and timeframes can be switched with a tap. Understanding exactly what a candle summarises, and how the timeframe changes the picture, protects you from reading too much into a single candle or into short-term noise.
Limitations
A candle hides the path within its session. Very short timeframes in thinly traded shares can show candles built from only a few trades. And while candle shapes describe sessions accurately, their power to predict the next session is weak.
Common mistakes
- Treating one candle as a forecast.
- Trading on very short timeframes without realising how much of the movement is noise.
- Ignoring the longer timeframe.
- Assuming all charting tools use the same colours.
Try it yourself
- Choose a share and view a daily candlestick chart for the last month.
- Find the candle with the longest upper wick and the one with the longest lower wick, and note what happened the next day.
- Switch to a weekly chart and see how the same month looks.
- Build one weekly candle yourself from five daily OHLC values on the exchange website, and compare it with the chart.
Key takeaways
- A candlestick's body runs from the open to the close; its wicks reach the high and low. A rising candle is usually green or hollow; a falling one red or filled.
- Long wicks show prices that were reached and rejected during the session. A small body shows little net change between open and close.
- A candle describes one session. On its own, it does not reliably predict the next move.
- The same price history looks different on intraday, daily, weekly and monthly charts. Longer timeframes smooth out noise; shorter ones show more detail and more false signals.
- Decide what question you are asking before choosing a timeframe, and check the longer timeframe for context.
Check your understanding
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Terms used in this lesson
- Candlestick
- A way of drawing a session's open, high, low and close, with a body between open and close and wicks reaching to the high and low.
- OHLC
- The open, high, low and close of a trading session, the four prices that bar and candlestick charts draw.
- Timeframe
- The period each bar or candle on a chart covers, such as one minute, one day or one week.
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This lesson is general education, not investment advice. Examples use made-up or clearly dated figures to explain ideas; they are not recommendations. Read the disclaimer.