How to Read Forex Candlestick Charts
A beginner-friendly guide to reading a candlestick chart: what OHLC means, how candle size reflects price action, and how timeframes change the picture.
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Candlestick charts are the default way most forex traders look at price, but a lot of beginners jump straight to memorizing named patterns before they understand what a candle is actually showing them. This article covers the fundamentals of reading a candlestick chart as a whole. If you want a deep dive into specific named shapes like the doji, hammer, or engulfing pattern, this site’s dedicated candlestick-pattern guide covers those in detail — the focus here is the broader skill of reading a sequence of candles and what they mean.
What a single candle shows: OHLC
Each candlestick represents one block of time — a minute, an hour, a day, whatever timeframe you’ve selected — and encodes four prices, often shortened to OHLC:
- Open: the price when that time period began.
- High: the highest price reached during that period.
- Low: the lowest price reached during that period.
- Close: the price when that time period ended.
The thick part of the candle, called the body, runs between the open and the close. The thin lines above and below, called wicks or shadows, mark the high and low. If the close is above the open, the body is typically shown in one color (commonly green or white); if the close is below the open, it’s shown in another color (commonly red or black). Most platforms let you choose the colors, so always check which convention a given chart is using.
What candle size and shape tell you
Beyond individual named patterns, there’s useful information in the basic shape of a candle on its own:
- A large body means price moved a long way between open and close during that period — a sign of stronger directional pressure in that timeframe.
- A small body means open and close were close together, suggesting indecision or a quieter period.
- Long wicks show that price moved a long way in one direction during the period before being pushed back, which can indicate a level where buyers or sellers pushed back against the move.
- A series of same-colored candles in a row is a simple visual cue of sustained directional pressure over that stretch of time.
Reading a sequence of candles, not just one
A single candle rarely tells you much on its own — the real skill is reading several candles together as a story of how buyers and sellers traded off control over that stretch of time. For example, a strong run of candles in one direction followed by a cluster of small-bodied candles can suggest the move is pausing, without saying anything certain about what happens next. Comparing the size and direction of recent candles against the broader trend (covered in a separate article on this site) and against support and resistance levels gives more context than looking at any one candle in isolation.
How timeframe changes what you’re looking at
The same pair, at the same moment, looks completely different depending on which chart timeframe you choose. A single daily candle might contain 24 hourly candles’ worth of movement compressed into one shape. Shorter timeframes (like one-minute or five-minute charts) show more noise and smaller, more frequent swings; longer timeframes (like daily or weekly charts) smooth that noise out and show the bigger picture. Many traders check more than one timeframe for the same pair — for instance looking at a daily chart for overall context and a shorter chart for finer detail — rather than relying on a single view.
What candlestick reading is — and isn’t
Reading candles well gives you a clearer picture of what has actually happened in the market and the general balance of pressure between buyers and sellers. It is not a method for knowing what will happen next with any certainty. Any shape, pattern, or sequence of candles can be followed by a move in either direction, which is why candlestick reading is normally used as one part of a broader approach to looking at a chart, alongside trend, support and resistance, and sound risk management, rather than as a stand-alone trading system.