What is candlestick?

A chart element showing an asset's opening, closing, high, and low price over a fixed period.

Candlestick charts are the default view on almost every exchange trading screen, and the timeframe selector above them decides what one candle represents: a minute, an hour, a day, a week. They describe past price and nothing else. Reading patterns into them is interpretation rather than data, and the same price history produces very different-looking charts depending on the interval you pick.

The mistake worth avoiding is confusing a candlestick's neatness with reliability. A daily candle collapses thousands of trades into four numbers, so a calm-looking body can hide a violent intraday move, and a long wick can be a single thin trade rather than a market-wide event.

How it works

Each candle covers one interval and encodes four prices. The body spans the open and the close, and it is drawn in one color when the close is above the open and another when it is below. The thin lines above and below, called wicks or shadows, reach the interval's high and low.

The candle's shape is therefore a summary, not a sequence. A candle with a small body and long wicks in both directions tells you price traveled far and came back, but not in what order.

Most charts also stack volume bars underneath. Volume is the sanity check on the candles: a large price move on thin volume is a much weaker signal about where the market actually clears than the same move on heavy volume.

Example

Illustrative numbers. A one-hour Bitcoin candle opens at 62,000, trades as high as 63,400, dips to 61,500, and closes at 62,800. The body runs from 62,000 to 62,800 and is drawn as an up candle. The upper wick reaches 600 above the close and the lower wick 500 below the open. The candle shows an 800 net gain, but price actually traveled at least 1,900 within the hour. A trader who set a stop 700 below the open would have been filled during that hour even though the candle closed green.

Why it matters when you buy

If you are placing a limit order rather than a market order, the recent candles tell you the range price has been trading in, which is the difference between an order that fills and one that sits. Candles say nothing about what a purchase will cost you in fees and spread, which is a separate measurement on the fee comparison and the liquidity pages.

Related terms

market order — fills now at whatever the book offers; limit order — fills only at your price or better; trading volume — the sanity check under the candles; volatility — how far price moves and how fast; spread — the gap between best bid and best ask.

Questions

Which timeframe should I look at?

That depends on how long you intend to hold rather than on any property of the chart. Longer intervals hide short-term noise and shorter ones hide the wider trend, and switching between them changes what a pattern appears to say.

Do candlestick patterns predict price?

RampAtlas does not make price predictions and cannot tell you whether a pattern works. What is verifiable is that a candle is a summary of past trades on one venue, so any predictive claim rests on interpretation rather than on the chart itself.

Why does my exchange's chart differ from a price aggregator?

An exchange draws only its own trades, while an aggregator blends several venues, usually weighted by volume. Small venues and thin pairs diverge the most from an aggregated price.