How to Read a Candlestick Chart

By VantureCap · Published July 15, 2026 · Updated July 21, 2026 · 6 min read

Learning path · Lesson 3 of 350 of 35 complete

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A candlestick compresses four prices into one shape: where a session opened, the highest and lowest prices it reached, and where it closed. The shape records what happened. It does not predict the next session by itself.

4,532.24openone edge of the body
4,551.44hightop of the upper wick
4,526.89lowbottom of the lower wick
4,549.78closethe other edge of the body
24.55 ptssession rangehigh − low

The four prices inside every candle

Price	Where to find it	What it tells you
Open	one edge of the body	where the session began
High	top of the upper wick	the highest traded level
Low	bottom of the lower wick	the lowest traded level
Close	the other edge of the body	where the session finished

Body versus wick: the body is the distance between open and close. The wicks show prices visited outside that range. On a green candle, close is above open. On a red candle, close is below open.

One candle, full size

body: open to closewick: the rest of the rangethe four printed prices

One real session from the chart below, blown up from the few pixels it gets there. It is red because the close finished below the open, which puts the open at the top of the body — the reverse of the green candle read in the next section. Real SPX session; date masked.

Read one real candle

The final visible candle in this real, date-masked SPX chart opened at 4,532.24, traded as high as 4,551.44 and as low as 4,526.89, then closed at 4,549.78.

SPX · 50 daily candles · dates masked. The blue dashed line is the level the trainer prices its spreads from in this scenario; this lesson has no trade on it.

The candle in the chart above

body: open to closewick: traded, not held

The same four prices spaced by how far apart they really are: the close stops 1.66 points under the high, so the upper wick is a sliver on a 17.54-point body. Leader lines fan the labels apart; the ticks sit at the true price.

Because the close finished above the open, the body is green. The close also sits near the high. Those are observations about price, not proof that buyers “controlled” the session: an OHLC candle does not show the path between its four printed prices, how long price spent near each level, or the order in which the high and low occurred — as the three sessions below demonstrate. One strong candle can still be a bounce inside a larger decline.

What one candle hides

reached the high firstreached the low firstchopped between the two

Three completely different sessions, one identical candle: the bar records four prices, never the route between them. Illustrative — the paths carry no scale claim. The gridlines are the four printed prices: O open, H high, L low, C close.

Knowledge check: what does the upper wick mean?

It spans from the higher edge of the body to the session high. It proves price traded there; it does not prove sellers will control the next session.

Read the sequence, not the color

Start with direction.
Are closes generally rising, falling, or moving sideways?
Look at range.
Are bodies and wicks expanding, contracting, or staying steady?
Find location.
Is price near a recent high, recent low, moving average, or strike?
Then read the last candle.
Does it confirm the sequence or interrupt it?

Run those four questions on the chart above and the trainer’s own reading of this session comes out as:

TREND UP 5d +1.83% 20d +2.19% ATR14 1.07% +0.03% vs the 20-day high above the 20- and 50-day SMA

Gaps and wicks need context

An opening gap compares the new open with the previous close. If the prior session closed at 4,500 and the next one opens at 4,506, the chart has a 6-point opening gap. A full gap is the stricter case: the new open is above the prior high or below the prior low. If the prior high was 4,510, that 4,506 open is not a full gap because the two sessions’ ranges can still overlap.

Two kinds of gap

opening gap onlyfull gap, above the prior high

A 4,506 open clears the prior 4,500 close by six points but not the prior 4,510 high, so the two sessions' ranges still overlap: opening gap, not a full gap. The gap example from the prose, drawn to scale.

A long wick proves that price visited an extreme and moved away before the close. Calling that move “rejection” is an interpretation, not a forecast: the candle does not tell you why it happened or guarantee follow-through. Scheduled events, overnight news, and volatility regime can matter more than the shape.

Knowledge check: opening gap or full gap?

The prior session closed at 4,500 with a high of 4,510. The next session opens at 4,515. It is both: a 15-point opening gap from the prior close and a 5-point full gap above the prior high. If it had opened at 4,506, it would be an opening gap but not a full gap.

What this chart cannot tell you

A daily candle does not show the order of every intraday move.
Green and red do not measure option premium, implied volatility, or time decay.
A masked chart removes hindsight, but it also removes the historical news story.
No candle pattern replaces a defined loss, a breakeven, or a decision to stand aside.

Practice reading the tape →10 free rounds a session · real market history · no signup

Keep learning

Practise this on real history: the trainer deals these structures on seventeen decks, and every one has a page showing how they actually settled — SPX, SPY, TSLA and GLD among them. The same structure behaves differently on an index than on a single stock, which is easier to see side by side than to be told. Compare the decks.

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Playbook Trainer is an educational game built on historical market data. Nothing on this page is investment advice or a recommendation to trade. Options involve substantial risk; defined-risk spreads can lose their full maximum loss. Scenario dates are masked, and prices reflect historical option quotes with simplified fills.