Candlestick

The four numbers, and what each one tells you

Part	What it is	What it says
Open	First traded price of the period	Where the period started
Close	Last traded price	Who won the period
High / low	Extremes reached	Where price was rejected
Body	Open to close	Conviction
Wick	Body to extreme	A level that was tested and failed

The wick is why candles beat a line chart. A line plots closes only, so it hides the entire story of a period where price ran ten percent higher and was slapped back down. That rejection is often the most useful information on the chart.

Patterns are weaker than they are sold as

A hammer at a level that already mattered is information. A hammer in the middle of nowhere is one period of noise with a name attached. The pattern is never the signal on its own; the location is. Any candle pattern taught without reference to where it formed is being taught badly.

Published studies of candlestick patterns in isolation generally find weak or no predictive edge. That does not make them useless, it makes them a vocabulary for describing what buyers and sellers did, which is a different and more honest claim.

The close is the number that counts

Intra-period price wanders. A level is only meaningfully broken when a candle closes beyond it, because that is where the period settled after everyone had a chance to react. Traders who act on a wick through a level rather than a close beyond it get stopped out by design, repeatedly.

What to do with this

• Read candles at levels, never in isolation.
• Wait for closes rather than touches when deciding whether structure has broken.
• Treat a long wick as evidence of rejection, which makes it a sensible place to put a stop beyond, not at.