Charts and candlesticks: timeframes, reading candles and common patterns
Technical analysis studies price charts to find areas where buying or selling pressure has shown up before, and to plan trades with clear entries, stops and targets. It doesn't predict the future; it helps you organise probabilities and risk. This lesson starts with the basics: chart types, timeframes and candlesticks.
Chart types
| Type | Shows | Use |
|---|---|---|
| Line chart | A line joining closing prices | Seeing the big picture and clean trends |
| Bar chart (OHLC) | Open, high, low and close for each period | Detailed, less visual |
| Candlestick chart | OHLC as coloured "candles" | The most popular: easy to read buying vs selling pressure |
Anatomy of a candlestick
Each candle shows one period (1 minute, 1 hour, 1 day…):
│ ← upper wick (shadow): the high
┌─┴─┐
│ │ ← body: between open and close
│ │
└─┬─┘
│ ← lower wick: the low- Bullish candle (often green or white): close above open; price rose during the period.
- Bearish candle (often red or black): close below open; price fell.
- Long body: strong move in one direction.
- Long wick: price went there but was rejected (pushed back) before the close.
- Small body with long wicks: indecision.
Timeframes
| Timeframe | Typical use | Trader style |
|---|---|---|
| Monthly / Weekly | Long-term trend and major levels | Position traders, investors |
| Daily (D1) | Main trend, key levels; one candle per day | Swing traders |
| 4-hour (H4) | Swings within the trend | Swing traders |
| 1-hour (H1) | Entries and trade management | Day/swing traders |
| 15-minute and below | Precise entries | Day traders, scalpers |
Beginners usually do better on higher timeframes (H4, daily): less noise, fewer decisions, spreads are a smaller part of each move, and you don't need to stare at screens all day. Lower timeframes are noisier, more stressful and cost-heavy.
Multiple timeframe analysis: look at a higher timeframe for direction and key levels (e.g. daily), then a lower one for timing (e.g. H1). Covered in support, resistance and trends.
Single-candle patterns
| Pattern | Look | Possible meaning (context needed) |
|---|---|---|
| Doji | Open ≈ close, tiny body | Indecision; may warn a move is slowing |
| Hammer | Small body at top, long lower wick, after a fall | Sellers pushed down, buyers pushed back: possible bullish rejection |
| Shooting star | Small body at bottom, long upper wick, after a rise | Possible bearish rejection |
| Pin bar | Long wick sticking out from surrounding candles | Rejection of a price level |
| Marubozu | Big body, almost no wicks | Strong one-sided pressure |
Multi-candle patterns
| Pattern | Look | Possible meaning |
|---|---|---|
| Bullish engulfing | A bullish body completely covers the previous bearish body | Buyers took control, especially at support |
| Bearish engulfing | A bearish body covers the previous bullish body | Sellers took control, especially at resistance |
| Inside bar | A candle within the previous candle's range | Consolidation; a breakout may follow |
| Morning star / evening star | Three-candle reversal patterns | Possible bottom / top |
Chart patterns (bigger shapes)
| Pattern | Idea |
|---|---|
| Double top / double bottom | Price fails twice at a level, possible reversal when the middle level breaks |
| Head and shoulders (and inverse) | Three peaks, the middle highest; a break of the "neckline" may signal reversal |
| Triangles (ascending, descending, symmetrical) | Price squeezes into a narrowing range before breaking out |
| Flags and pennants | Short pauses within strong moves; possible continuation |
| Channels | Price moves between parallel lines |
The honest truth about patterns
- Patterns are probabilities, not signals that always work. Many fail.
- The same pattern means much more at a key level (support, resistance, trend line) than in the middle of nowhere.
- Pattern names differ between books; the underlying idea is always buyers vs sellers.
- Seeing patterns everywhere is a common beginner bias. Test any pattern-based rule on lots of past examples before trusting it (backtesting).
Reading a chart step by step
- Zoom out (daily/weekly): is price trending up, down or sideways?
- Mark key levels where price has turned several times.
- Look at the last few candles near those levels: strong rejection (long wicks), strong momentum (big bodies) or indecision (dojis)?
- Check the calendar for upcoming news.
- Decide what would make you act, and where you'd be wrong, before price gets there.
Practice tasks
- On TradingView (free), open EUR/USD daily. Find and screenshot 5 bullish engulfing candles at clear lows and 5 in random places. What happened next in each case?
- Switch between line, bar and candlestick charts for the same month.
- Compare a 15-minute and a daily chart of the same week. Which looks noisier?
Summary
- Candlesticks show open, high, low and close; bodies show direction and strength, wicks show rejection.
- Higher timeframes are calmer and better for beginners; use multiple timeframes together.
- Candle and chart patterns are probabilities that work better at key levels, and they need testing.
Check yourself
What four prices does a candlestick show? (letters, like ABCD)
Show answer
OHLC
A long lower wick usually shows rejection of lower or higher prices?
Show answer
lower
What is a candle with open almost equal to close called?
Show answer
doji
Which is noisier: the 15-minute chart or the daily chart?
Show answer
15-minute