Understanding a single candlestick is the first step to mastering candlestick chart analysis. Each candle encapsulates essential price information within a specific time period, providing clues about market sentiment and possible price movements.
In this article, we will break down the four critical components of a candlestick — Open, High, Low, and Close — and explain how to interpret them to better read crypto charts.
What Is a Single Candlestick?
A single candlestick represents price data during a fixed time frame — this could be 1 minute, 15 minutes, 1 hour, or even 1 day.
The candlestick’s shape and size are determined by four values:
- Open (O): The price at the start of the period
- High (H): The highest price reached during the period
- Low (L): The lowest price reached during the period
- Close (C): The price at the end of the period
These four values are the basis for plotting the candle’s body and wicks.
Breaking Down the Candlestick Components
- Body: The rectangle between the open and close prices.
- If the close is higher than the open, the body is typically colored green or white (bullish candle).
- If the close is lower than the open, the body is colored red or black (bearish candle).
- Upper Wick (Shadow): The thin line extending from the top of the body to the high price.
- Lower Wick (Shadow): The thin line extending from the bottom of the body to the low price.
How to Interpret the Open, High, Low, and Close Prices
- Open vs. Close: Indicates direction of price movement during the period.
- High and Low: Show the range and volatility.
- A long body means strong buying or selling pressure.
- Long wicks suggest price rejection or volatility, hinting at potential reversals or indecision.
Example: Reading a 15-Minute Candle on Ethereum
| Price Point | Value |
|---|---|
| Open | $1,800 |
| High | $1,820 |
| Low | $1,790 |
| Close | $1,815 |
In this candle:
- The close ($1,815) is higher than the open ($1,800), so the candle is bullish.
- The upper wick (from $1,815 to $1,820) shows the highest price reached.
- The lower wick (from $1,790 to $1,800) shows how low the price went.
- The relatively long upper wick may indicate some selling pressure at the high.
Common Misunderstandings
- Not all candles with long wicks mean a reversal — context and volume matter.
- Timeframe affects interpretation — a 1-minute candle vs. 1-day candle shows very different market behavior.
- Candlesticks don’t predict future prices on their own — they are part of a bigger puzzle.
Pro Tips for Beginners
- Always analyze multiple candles together, not just one.
- Compare candles across timeframes for better confirmation.
- Combine candlestick reading with other technical indicators like volume or moving averages.
Conclusion
Reading a single candlestick is fundamental to understanding market dynamics in crypto trading. Mastering the Open, High, Low, and Close helps you decode the battle between buyers and sellers within any given period.
Next, we’ll explore why candlestick charts offer advantages over traditional line charts and how they give deeper insights into price action.