How to read candlestick charts. A candle is a receipt, not a forecast.

A candlestick shows one period of trading: a day, an hour, a week, whatever your chart is set to. The body is the box between the open and the close. Green (or hollow) means it closed higher than it opened; red means lower. The thin lines above and below are the wicks: how far the price went beyond the body before it came back. That's it. Everything else people say about candles is interpretation.

Here's the bit people skip. A candle is a receipt of what already happened. It doesn't know what happens next, any more than last month's grocery bill knows what you'll cook tomorrow. Traders give some shapes names, and tell stories about them. Some of those stories have been tested. Scroll to "What the research says" before you trust one.

Any charting tool shows candles. In our video we use TradingView because it's popular. We don't endorse it, we're not paid by it, and you can use any charting tool you like. On this page every price is illustrative: "Example stock (made up)".

Twenty days of made-up prices. Tap any candle to read it: the four prices, the body and wicks measured, the name traders use for the shape, and how it compares with the ten candles before it. Or type a candle from your own chart below. It all runs on this page.

Example stock (made up), 20 illustrative trading days. Volume bars at the bottom.

Our teaching rule, not a market standard: doji-like if the body is 10% of the range or less; a hammer shape if the lower wick is at least twice the body and the upper wick no bigger than the body; a shooting-star shape the other way round; a long body if the body is 70% of the range or more. Change the thresholds in the sheet if you prefer others.

1. Which way did it close: up (green) or down (red)?
2. How big is the body compared with the whole range?
3. Where are the wicks, and how long?
4. How does it compare with the last 10 candles: bigger, smaller, a gap?
5. What's the volume doing, if your chart shows it?
6. What would a trader call this shape, and what does the research say about that shape?
7. Before any decision: what would prove the story wrong, and what does a trade cost you in brokerage, taxes and the spread?

Four prompts for Claude (or any capable AI assistant). Each one tells the AI not to name a security, not to forecast, and not to say buy, sell or hold. If yours does any of those anyway, that's the failure to watch for: close the chat. Screenshots you share: hide the symbol and your account name first, and use data at least three months old.

Prompt 1: explain one candle

Paste one row from the reader above, or from our sheet.

Explain how to read one candlestick on a price chart, for a complete beginner:
open, high, low, close, the body, the wicks and the colour. Use the numbers I paste
below as the example and show the arithmetic for the body and each wick.
Don't name any stock, index or company, don't say what the price will do next,
and don't say buy, sell or hold. Just explain what happened.
Open: 99.80 · High: 101.20 · Low: 97.20 · Close: 101.00

Prompt 2: read my chart, describe, don't predict

Attach a screenshot of a candlestick chart with the symbol hidden.

I'm attaching a screenshot of a candlestick chart. The symbol is hidden and the data
is old. Describe the last 10 candles in plain words: colour, body size, wick length,
and any gaps. Point out shapes traders give names to (doji, hammer and so on), and for
each one say what traders claim it shows. Don't forecast, don't name any security,
and don't suggest a trade. If you can't read a candle clearly, say so instead of guessing.

Prompt 3: what the research says

Turn web search on. Then check every study it names yourself, starting with the ones below.

What does published research say about whether candlestick patterns predict future
prices, after trading costs? Use web search. Give me the studies with authors, year,
the market and years they tested, and what they found, quoted. Say clearly where the
evidence is weak, old or mixed. If you can't find a source, say so. Don't give me a
trading rule and don't name any security.

Prompt 4: quiz me

The fastest way to learn: let the AI test you on our 20 made-up days.

Quiz me on reading candlesticks. I'll paste 20 illustrative candles (open, high,
low, close). Pick one at a time, ask me its colour, its body size and which wick is
longer, and what shape traders would call it. Check my answer with the arithmetic.
Never say what the price will do next and never suggest a trade.
[paste the 20 rows from the Prices tab of the free sheet]

v1.0, 4 November 2026. Tested on the worked example; the models and what each got right or wrong are in our test notes.

Two of the most cited tests point in different directions, and both are old. A study of Dow Jones Industrial Average stocks from 1992 to 2002 found candlestick strategies created no value: "There is no evidence that a trader adhering to candlestick technical analysis would out-perform the market." An earlier study of S&P 500 stocks from 1992 to 1996 found some three-day patterns statistically significant, with a profit of almost 1% over two days; its abstract doesn't say whether that survives trading costs. Neither tested Indian stocks.

So here's the stand we take. A pattern is a hypothesis, not a fact. If someone sells you one as a sure thing, ask for the study, the market, the years and the costs. If they can't show it, you have your answer.

And the odds. SEBI found 87.7% of individual traders in equity futures and options made a net loss in FY26, on fully regulated Indian exchanges. Reading a chart is a skill. It isn't an edge.

Day 8 of our made-up chart: open 99.80, high 101.20, low 97.20, close 101.00.

That's all the candle can tell you: sellers pushed the price down during the day, and by the close it was back above the open. A trader might call it a hammer after a fall. Whether that means anything for day 9 is exactly the question the research above hasn't settled. Now look at day 19: the same shape, tiny, in a quiet patch. Same name. Far less story.

Illustrative prices, our calculation. Not a pattern to trade, and no security is shown.

To see the 20 days as a chart in the sheet: select the Prices tab's Open, High, Low and Close columns, then Insert → Chart → Candlestick (Google Sheets) or Stock chart (Excel).

The research and the rules we lean on, with where we read them.

• The shape names come from our stated teaching rule. Books and tools use slightly different thresholds, so another tool can name the same candle differently.
• One candle is one period. A day candle hides everything that happened inside the day; switch the chart to hours and the same day looks different.
• Traders give one shape two names depending on what came before it (hammer or hanging man). The reader shows the shape; it doesn't judge the trend.
• The research on candlestick patterns is mixed and mostly old, on US stocks. We quote it; we don't claim it holds for any market today.
• An AI can misread a screenshot: a wick it can't see, a colour it guesses. Check its description against the four prices, every time.
• No security, broker or platform is recommended. Using a charting tool on screen in our video isn't an endorsement.
• Education only. Nothing here is a signal, a forecast or a reason to trade.

Reader tested against hand-worked candles, every shape at its threshold, impossible prices, and the 20 illustrative days in context: 32 checks. v1.0, 4 November 2026.