Candlesticks

What this unit covers

Learn to read a single candlestick, its open, high, low and close, and to recognise common shapes like the doji, hammer and engulfing pattern.

By the end you will be able to

• Identify the open, high, low, and close on a single candlestick.
• Recognise a doji, a hammer, and an engulfing pattern by their shape.
• Explain that a candlestick records the past, not a prediction.

How it starts: Two Candles, Same Chart

1. A daily chart shows two candles side by side on the same stock.
2. One candle has a small body with a long lower line beneath it.
3. The other has almost no body at all, so what sets these apart?

Words you will meet

Candlestick

A chart shape showing the open, high, low, and close of a price in one period.

Open

The price at the start of the period a candle covers.

Close

The price at the end of the period a candle covers.

Doji

A candle with almost no body, showing open and close landed near the same price.

Hammer

A candle with a small body near the top and a long lower wick.

Engulfing pattern

Two candles where the second one's body fully covers the first one's body.

In this module: Understanding Price Behaviour

1. Market Structure
2. Trends
3. Support & Resistance
4. Candlesticks (this unit)