TRADING GLOSSARY

Candlestick charts: the language of price movement

Candlestick charts are the most popular way to visualize price data. Developed by Japanese rice traders in the 18th century, each candle shows four price points for a given period: the open, high, low, and close. The body of the candle (the thick part) shows the range between open and close, while the wicks (thin lines) show the high and low.

Reading a single candlestick

A green (or hollow) candle means the close was higher than the open — the price went up during that period. A red (or filled) candle means the close was lower than the open — the price went down. Long bodies indicate strong buying or selling pressure. Short bodies indicate indecision. Long wicks indicate rejection of extreme prices.

Key patterns

Doji: Open and close are nearly identical — pure indecision. Hammer: Small body at the top, long lower wick — buyers rejected lower prices. Shooting star: Small body at the bottom, long upper wick — sellers rejected higher prices. Engulfing: Second candle completely engulfs the first — strong reversal signal. Morning/evening star: Three-candle reversal pattern appearing at bottoms and tops respectively.

AskTrade’s Technical Analysis Agent identifies all major candlestick patterns and rates their reliability based on where they appear within the broader price structure.

Disclaimer: This is for educational purposes only and does not constitute financial advice. Trading involves significant risk of loss.

Experience Multi-Agent Research

12 AI agents collaborate to deliver institutional-quality analysis. Try it from $2.

Start Trading →

AskTrade analyses are AI-generated and do not constitute financial advice.