Candlestick Chart
A candlestick chart shows a security's open, high, low and closing prices for each period as a candle-shaped bar, making price action easy to read at a glance.
Each candlestick represents one period, such as a day. The thick part, called the body, spans the opening and closing prices. Thin lines above and below, called wicks or shadows, show the period's high and low. Typically, a green or hollow body means the close was above the open; a red or filled body means the close was below it.
Candlestick charting originated with Japanese rice traders in the 18th century and was popularized in the West by Steve Nison around 1990. Compared with a simple line chart, candles show the range and direction of trading within each period.
Traders look for patterns such as the doji (open and close nearly equal, signaling indecision), the hammer (long lower wick after a decline) and engulfing patterns (a large candle fully covering the previous body). These are interpreted as hints of possible reversals or continuations, though their reliability is debated.
Example: a stock opens at $50, trades as high as $53 and as low as $49, and closes at $52. Its daily candle has a green body from $50 to $52, an upper wick to $53 and a lower wick to $49.