A candlestick is not a fortune-telling rune. It is a compressed record of one auction: where price opened, the highest and lowest bids that traded, and where the period closed. Four numbers, drawn as a body and two wicks. Everything a candle can legitimately tell you comes from those four numbers and where they sit on the chart.
Anatomy
The body spans open to close — filled one colour when the close is higher, the other when lower. The wicks mark the extremes that did not hold. A long lower wick says sellers pushed price down and buyers took it all back; a long upper wick says the opposite. A tiny body with long wicks — a doji — says the auction ended roughly where it began: indecision, not direction.
Timeframes are resolutions, not markets
The same price stream renders as one daily candle, six four-hour candles or ninety-six fifteen-minute candles. Higher timeframes summarise more auction and carry more weight; lower ones show the noise inside. A workable habit from desk practice: form the view on the daily and four-hour chart, then drop to a lower timeframe only to time the entry. Signals read against the higher-timeframe context, not instead of it.
Patterns, honestly
- Engulfing — one body completely covers the prior body: a genuine shift in control within those two periods.
- Pin bar / hammer — a long wick rejecting a level: meaningful at support or resistance, meaningless in the middle of nowhere.
- Doji — indecision. After a long trend it can precede a turn; inside a range it is just Tuesday.
The honest summary of decades of pattern research: shapes alone carry little edge. A rejection wick at a level the market has defended twice before is information; the same wick floating mid-range is decoration. Location first, shape second — which is why the next lesson is about levels and structure.