Key Points

  • Each candlestick shows price movement for one timeframe, such as one hour or one day.
  • The body shows the open and close… the shadows show the high and low.
  • Candle colour is a shortcut for whether price closed up or down, but the shape matters too.
  • Candlestick patterns are clues about sentiment, not guarantees.
  • Beginners should learn candle anatomy first, then a small set of common patterns.

Quick Answer

Candlestick charts show how price moved within each timeframe. The candle body reflects the open and close, while the shadows show the highs and lows. Beginners use candlesticks to judge momentum, indecision, and possible turning points, especially when patterns appear at important chart zones.

Where This Lesson Fits

Lesson 3 covered how price charts work and what information they show. Lesson 4 builds on that by teaching candlestick charts, how each candle is formed, what the body and shadows represent, and why candle context matters.

This lesson is part of the Technical Analysis for Beginners series. For the full lesson map and all supporting guides, visit the Technical Analysis for Beginners Hub.

What A Candlestick Represents

A candlestick is one “unit” of time on a chart.

If you are on a one hour chart, each candlestick represents one hour of trading. If you are on a daily chart, each candlestick represents one day.

That is why timeframe matters. A dramatic candle on a five minute chart may be meaningless on the daily chart.

Candlestick Anatomy

Every candlestick contains four key prices:

  • open
  • high
  • low
  • close

The body
The body is the distance between open and close. A larger body often suggests stronger directional pressure during that period.

The shadows
The shadows, sometimes called tails, show the highest and lowest prices reached. Long shadows can suggest rejection, meaning price travelled but did not hold those extremes.

a shadow of a tree on a wall
Photo by Monica Valls / Unsplash

What Candle Colour Really Means

Most charting platforms use:

  • green for a candle that closed higher than it opened
  • red for a candle that closed lower than it opened

Colour is useful, but it is not the full story.

A green candle can still have long upper shadows, showing that buyers pushed price up but could not hold the highs. A red candle can still have long lower shadows, showing selling pressure met buying support.

This is why candle shape and location matter as much as colour.

Three Common Patterns Beginners Should Know

Patterns are most useful when they appear at meaningful zones, such as prior swing highs or lows, or support and resistance areas.

Doji
A doji forms when the open and close are close together. It often signals indecision and a possible pause in momentum.

Hammer
A hammer has a small body with a long lower shadow. After a decline, it can suggest buyers absorbed selling pressure and pushed price back up. A hammer is more meaningful when it forms at a well-defined area of demand.

black and silver claw hammer
Photo by Andrew George / Unsplash

Engulfing Candle
An engulfing candle is when the body fully covers the previous body. It can suggest a shift in control, especially when it appears after a trend move into a key zone.

These are not automatic reversal signals. They are clues about changing pressure between buyers and sellers.

How To Practise Candlesticks Without Memorising Everything

Beginners improve fastest by building pattern recognition through repetition.

A simple practice routine:

  1. Use one market and one timeframe, such as Bitcoin on the daily chart.
  2. Mark a few obvious support and resistance zones.
  3. Observe what candle behaviour appears at those zones.
  4. Record what happens next over the following candles.

Over time, you start recognising which candles were meaningful, and which were noise.

Mini FAQs

Are candlestick patterns reliable in crypto?
They can be useful, but they work best with context. A pattern in the middle of nowhere is less meaningful than the same pattern at a key chart zone.

What timeframe should beginners use to learn candlesticks?
Daily charts are often easiest because they reduce noise. Very short timeframes can confuse beginners because patterns appear constantly.

What does a long lower shadow usually suggest?
It often suggests rejection of lower prices, meaning buyers stepped in after sellers pushed price down.

Should beginners memorise lots of candlestick patterns?
No. Learn the anatomy first, then a small set of common patterns, and focus on where they appear on the chart.

Is a green candle always bullish?
Not necessarily. A green candle with long upper shadows can still signal selling pressure near the highs.

Next Lesson (paste)

In this lesson you learned how to read candlesticks, what a candle is actually describing, and how to avoid interpreting single candles without context.

Next, Lesson 5 explains timeframes in technical analysis and how timeframe choice changes what your chart is telling you.

For the full lesson map and all supporting guides, visit the Technical Analysis for Beginners Hub.

If this helped you and you want a calmer, more repeatable way to navigate cycles, consider becoming a member.

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This isn’t noise… it’s the full playbook.

This content is for educational purposes only and does not constitute financial advice. Crypto assets are volatile and you can lose some or all of your capital. Always do your own research, consider your financial circumstances, and use appropriate risk controls.