A candlestick compresses four numbers, open, high, low and close, into one shape. Learn to read the shape and you read the balance between buyers and sellers.
Anatomy of a candle
The body spans the open and close; the wicks mark the high and low. A long upper wick says buyers pushed price up but could not hold it, sellers stepped in.
Common single-candle signals
Dojis show indecision, hammers hint at rejection of lower prices, and engulfing candles flag a shift in control. None are signals on their own, context and location are everything.
Reading in context
A hammer at a major support level after a sustained downtrend carries weight. The same candle in the middle of a range is noise. Always ask what the candle is telling you about where price was rejected.
