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A chart is a record of what buyers and sellers actually did. Candlesticks pack the most information into the smallest space, which is why almost every platform uses them by default.
Chart types and timeframes
A line chart joins closing prices; a bar chart and a candlestick chart also show the open, high and low. Every chart has a timeframe: on an H1 chart each candle is one hour, on D1 one day. MetaTrader 5 offers 21 timeframes from one minute (M1) to one month (MN1). Beginners usually do better on H4 and D1, where there is less noise.
Anatomy of a candle
Each candle shows four prices for its period: open, high, low and close (OHLC). The thick part is the body, between open and close. The thin lines are the wicks (or shadows), reaching to the high and the low.
- A bullish candle closed higher than it opened (usually green or hollow).
- A bearish candle closed lower than it opened (usually red or filled).
Reading the story
A long body means one side was in control the whole period. A long lower wick means sellers pushed the price down but buyers brought it back: a sign of demand. Three patterns worth knowing:
- Doji: open and close almost equal. Indecision.
- Hammer / pin bar: small body, long lower wick, appearing after a fall. Possible rejection of lower prices.
- Engulfing: a body that completely covers the previous candle's body. A strong shift in control.
A single candle is never a signal on its own. Patterns matter much more when they appear at a support or resistance level. Practise on a live chart such as EUR/USD.
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