What is a candlestick chart?
- Author
- CRYPTO PORT Editorial
- Published
- Updated
- Reading time
- 4 min
In short
A candlestick condenses the open, high, low and close of one time period into a single figure. It records how the price moved in the past; it does not indicate where it goes next. The picture also changes with the chosen interval and the exchange.
Key points
- One figure shows open, high, low and close
- The body spans open to close; wicks mark the extremes
- The chosen interval changes the picture
- It records the past and predicts nothing
Definition
A time series of figures in which a body spans the open and close of each period and wicks extend to the high and low.
Each candle is built the same way. The first price in the period is the open and the last is the close, and the rectangle between them is the body. Lines extend from the body to the period's high and low. A close above the open is drawn one colour, a close below it another.
On a daily chart one candle is one day; on an hourly chart, one hour. The same stretch of trading looks jagged on a one-minute chart and collapses into a single candle on a weekly one. Neither view is more correct — they are different resolutions of the same record.
What matters is that a candlestick chart is a record of what happened, not a mechanism that tells you what comes next. Particular shapes have traditional names, but a name does not guarantee what the price does afterwards. And since crypto prices differ by exchange, the same hour can produce differently shaped candles on different venues.
Watch out for
- · A recognisable shape does not determine what the price does next
- · Prices differ by exchange, so the same period can produce different candles
- · Period boundaries and time zones vary between exchanges and charting tools