Candlestick

Candlestick charts originate from 18th-century Japanese rice trading and were popularised for Western markets by Steve Nison in the 1990s. Each candle represents a single time period - a minute, an hour, a day, or any interval the trader selects. The rectangular body spans the open-to-close range: a bullish candle (typically white or green) closes above its open; a bearish candle (typically black or red) closes below. Thin lines called wicks or shadows extend above and below the body to the period's high and low.

The shape and relative size of bodies and wicks communicate market sentiment at a glance. A long bullish body with short wicks signals decisive buying pressure. A small body with long wicks - the spinning top or doji family - indicates indecision and a potential reversal. The hammer (small body, long lower wick) and shooting star (small body, long upper wick) are among the most widely watched single-candle reversal signals.

Multi-candle patterns such as the engulfing, morning star, and three white soldiers provide additional context. The engulfing pattern - where a candle's body completely covers the prior candle's body in the opposite direction - is considered a stronger signal because it requires two-session confirmation. Traders treat candlestick patterns as probabilistic signals rather than certainties, and almost always combine them with other tools such as support/resistance levels, RSI, or volume before acting.