# How to Read Candlestick Charts for Beginners · DT Academy > Learn to read a candlestick chart: what the open, high, low and close mean, how bodies and wicks form, and how timeframes nest. [Back to The DT Intensive](https://www.thedtterminal.com/academy/courses/dt-intensive) Day 2How to read candlesticks Chapters done # How to read candlesticks Day 02 of 26 · 7 min read · By DT Terminal A candle is one block of time drawn as four prices: where it opened, the highest and lowest it reached, and where it closed. This lesson shows how a candle builds, how bigger timeframes are made of smaller ones, and what bodies and wicks tell you. Chapter 1 of 7 ## Asset classes Every instrument belongs to an **asset class**, a group that behaves alike. You read them all with candles, but each class has its own hours and news. This course works with **forex, commodities, indices and crypto**, and sometimes stock CFDs. | Class | What you trade | Examples | Hours | | --- | --- | --- | --- | | Forex (We trade) | One currency against another. EURUSD at 1.0850 means one euro costs 1.0850 US dollars. | `EURUSD` `GBPUSD` `USDJPY` | 24 hours, Sunday to Friday | | Commodities (We trade) | Raw materials priced in dollars. XAUUSD is **one ounce of gold**. | `XAUUSD` `XAGUSD` `USOIL` | Nearly 24 hours, Sunday to Friday | | Indices (We trade) | A basket of a country's biggest shares, traded as one price. | `NAS100` `US30` `GER40` | Nearly 24 hours, busiest at the exchange open | | Crypto (We trade) | Digital currencies priced in dollars. | `BTCUSD` `ETHUSD` | **Every day, weekends included** | | Stock CFDs (Sometimes) | One company's share price, without owning the share. **Can gap on earnings.** | `AAPL` `NVDA` `TSLA` | Exchange hours, 09:30 to 16:00 New York | The same hours as a week. Each bar is when that class can trade: One week when each class trades, New York time Exact hours vary by broker and by symbol. Indices trade nearly all day, and the gold ticks mark the US cash open, **09:30 New York**, when volume on US indices picks up sharply. Other indices get busy at their own exchange's open. **Everything here is a CFD.** At a retail CFD broker each of these is a **contract for difference**. You hold a position on the price, never the euros, gold or coins. **Go deeper** **Not the focus of this course:** owning shares outright, and bonds, which matter here as a driver of currencies rather than as something to trade. Chapter 2 of 7 ## Long and short You can make or lose money in either direction. Every diagram from here on comes in both directions, so these two words need to become automatic. Long buy You buy, and gain if price goes **up**. Buy `EURUSD` at 1.0850 and close at 1.0900: the 0.0050 move is yours, less costs. If price falls instead, you lose the difference. Short sell You sell first, and gain if price goes **down**. Sell `XAUUSD` at 4,120.00 and buy it back at 4,100.00: the 20.00 move is yours, less costs. If price rises instead, you lose the difference. Chapter 3 of 7 ## The candle A candle sums up one block of time in four prices: **open**, **high**, **low** and **close**, or OHLC. The **body** runs from open to close. The **wicks** show how far price travelled before coming back. OHLC one candle, four prices **Read the colour first.** **Green finished higher** than it started; **red finished lower**. The high and low are the wick tips. On a real chart, candles sit side by side: DT Terminal Charts EURUSD · H1 Two days of EURUSD on a chart. Every candle has the same four prices as the drawing above: find the open, high, low and close of the two marked ones. Example 01 ### A Saturday candle on BTCUSD BTCUSD · D1 Bearish long upper wick Open 118,420, high 119,870, low 116,950, close 117,310. Crypto trades every day, so `BTCUSD` prints a Saturday candle. | Part | Working | Result | | --- | --- | --- | | Colour | Close 117,310 is below open 118,420 | Bearish, red | | Body | 118,420 - 117,310 | 1,110 | | Range | 119,870 - 116,950 | 2,920 | | Upper wick | high 119,870 - open 118,420 | 1,450 | | Lower wick | close 117,310 - low 116,950 | 360 | On a red candle the open is the top of the body, so the upper wick runs from open to high. Price rallied 1,450 above it, gave it all back, and closed 1,110 lower. **Go deeper** `EURUSD` has no Saturday candle: **forex closes Friday at 17:00 New York time** and reopens Sunday at 17:00. Open and close swap places between the two colours: on a green candle the open is the bottom of the body, on a red one it is the top. The same reading applies to every candle on the chart. Weekend trading is often thinner than weekday trading, so a weekend candle can move further on less activity. Chapter 4 of 7 ## How a candle forms Here is one hour of `EURUSD` drawn as a line, and the 1 hour candle it produces. It plays once when you reach it; drag the slider to scrub through the hour, or replay it. Watch the body change colour each time price crosses back over the open. EURUSD · H1 one hour, 12:00 to 13:00 Time within the hour Time 13:00 O 1.08485 H 1.08620 L 1.08380 C 1.08575 **What a candle hides.** In this hour the low came first, at about 12:19, and the high came late, at about 12:49. The finished candle cannot tell you that. **Two very different hours can print the identical candle**, which is why traders drop to a lower timeframe when the order matters. Chapter 5 of 7 ## Timeframes The **timeframe** is how much time each candle covers: 15 minutes on `M15`, 4 hours on `H4`. Same market; each candle just sums up more or less. **Bigger candles are built from smaller ones.** Four 15 minute candles become one 1 hour candle: the first one's open, the highest high, the lowest low, and the last one's close. M15 to H1 four candles make one | Code | One candle | Per day | | --- | --- | --- | | M1 | 1 minute | 1,440 | | M5 | 5 minutes | 288 | | M15 | 15 minutes | 96 | | H1 | 1 hour | 24 | | H4 | 4 hours | 6 | | D1 | 1 day | 1 | Above D1 sit W1 (one week per candle) and MN (one month). Watch four candles become one In the backtester, play one hour on M15, then switch to H1. Check the new H1 candle's open, high, low and close against the rule above. Chapter 6 of 7 ## One day, two timeframes Forex days end at 17:00 New York time, so many brokers run charts on **GMT+2** (GMT+3 in the US summer). D1 then runs 00:00 to 24:00 on that server clock, as do the H4 candles below. Example 02 ### One NAS100 day, on D1 and on H4 NAS100 · H4 Bullish D1 six H4 candles, one D1 D1: open 24,150.0, high 24,326.5, low 23,962.0, close 24,302.0. On D1 the day is one calm, bullish looking green candle. On H4 the 16:00 candle fell from 24,248.0 to 23,962.0, a 286.0 point swing. The 20:00 candle won back 268.0 points of body to close at 24,302.0. Same D1 prices, a very different ride. **Higher timeframes give direction, lower timeframes give detail.** A trend on H4 can look like chop on M1. **Check which timeframe someone means.** **The D1 candle, worked out** D1: open 24,150.0, high 24,326.5, low 23,962.0, close 24,302.0. On H4 the 16:00 candle closed 187.5 points below its open. The D1 body is 24,302.0 - 24,150.0 = 152.0 points and its lower wick 24,150.0 - 23,962.0 = 188.0. Chapter 7 of 7 ## Bodies and wicks The body shows where price was **accepted**. The wicks show where price went and was **pushed back**. Large green body with small wicks ### Big body, small wicks One side was in control from open to close: **momentum**. A red version means sellers were in control. Small body near the top with a long lower wick ### Long wick Price pushed into a level and was rejected. A long lower wick means **lower prices were refused**; a long upper wick means higher prices were. Thin body with wicks on both sides ### Doji Open and close are almost the same price. Neither side won the period: **indecision**, often before a move. At a level, a wick through it only says price visited. **The close says whether price stayed.** Close vs wick the same level, two outcomes **Closes matter more than wicks.** A wick through a level that closes back on the other side is **a rejection, not a break**. Every lesson that follows uses this rule. DT Terminal Charts XAUUSD · H1 The same rule on a real chart. The first push above 4,110.00 leaves only a wick and closes back below. The break is the later candle that closes above the line. Example 03 ### Five hours of XAUUSD, one candle at a time XAUUSD · H1 Refused wick above, close below 16:00 high 4,126.30. Candle 5 high 4,134.60, close 4,121.00. | # | Time | Open | High | Low | Close | What it says | | --- | --- | --- | --- | --- | --- | --- | | 1 | 13:00 | 4,118.20 | 4,121.90 | 4,104.60 | 4,106.10 | Big red body, small wicks. Sellers controlled the hour from open to close. | | 2 | 14:00 | 4,106.10 | 4,109.30 | 4,091.80 | 4,107.40 | Long lower wick, tiny body. Price fell to 4,091.80 and was pushed all the way back: lower prices were refused. | | 3 | 15:00 | 4,107.40 | 4,112.80 | 4,102.50 | 4,107.70 | Doji. Open and close almost equal: neither side won the hour. | | 4 | 16:00 | 4,107.70 | 4,126.30 | 4,106.90 | 4,124.80 | Big green body. Buyers controlled the hour and closed it near its high. | | 5 | 17:00 | 4,124.80 | 4,134.60 | 4,119.20 | 4,121.00 | Long upper wick. Price traded above the 16:00 high but the hour closed back below it: higher prices were refused, not accepted. | Candle 5 traded up to 4,134.60, above the 16:00 high of 4,126.30, but closed at 4,121.00, back below it. The wick looks like a break. The close says it was refused. **Candle 2, worked out** Candle 2 is the clearest wick: its lower wick is 4,106.10 - 4,091.80 = 14.30 of a 17.50 range, against a body of only 1.30. Practise reading closes Replay a week of `XAUUSD` on H1, one candle at a time, and read each close before the next one prints. 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