One candle holds four prices. Learn to read what happened, measure its parts and recognise what the daily record leaves unknown.
- Read open, high, low and close.
- Measure the body and both wicks.
- Separate a daily observation from an interpretation.
Does a green candle always mean a gain?
A friend points to a green candle and says, “The stock finished higher than yesterday.” Before agreeing, ask which two prices the colour compares. By the end of this lesson you can reconstruct a candle, check that statement and explain one thing the daily record leaves unknown. All rupee values here are invented for practice.
Read one trading session
A share is a unit of ownership in a company. A daily chart groups trading into sessions. Each candle uses four numbers from the same session and the same price basis. The vertical axis measures price. Successive candles on the horizontal axis represent successive sessions. The space from Friday to Monday can therefore look like the space from Monday to Tuesday.
| Field | Price | How to read it |
|---|---|---|
| Previous close | 104 | The comparison from the preceding session. |
| Open | 100 | The session’s opening price. |
| High | 108 | The highest traded price in the session. |
| Low | 96 | The lowest traded price in the session. |
| Close | 106 | The closing value in the daily record. |
The solid body joins the open and close. The thin extensions, called wicks, reach the high and low. On this chart, green means close above open. Read the numbers as well as the colour. The ₹12 range is high minus low. The ₹6 body is the absolute distance between open and close. The upper wick is ₹108 − ₹106 = ₹2. The lower wick is ₹100 − ₹96 = ₹4. Those three lengths sum to the range. This is also a way to catch a chart drawn incorrectly.
Build the candle with your thumb
Keep open at ₹100, high at ₹108 and low at ₹96. Predict what happens to the body when the close reaches ₹100. Then try it.
- Body
- ₹6
- Upper wick
- ₹2
- Lower wick
- ₹4
- High–low range
- ₹12
- Close versus open
- +₹6
- Close versus previous close
- +₹2
The close is above the open and above the previous close.
Invented prices for learning. Green means close above open here. The written values carry the same information as the colours.
What happens at ₹100?
Open and close coincide, so the body is zero. The high–low range is still ₹12, and the close is ₹4 below the previous close. A tiny body can sit inside a wide daily range.
Can a green candle finish down?
Move the close to ₹102, or work it out on paper. Write down two changes, one measured from the open and one from the previous close. Which one would answer your friend’s claim?
Compare your reasoning
₹102 − ₹100 = +₹2 for the session body. ₹102 − ₹104 = −₹2 close-to-close, about −1.92% of ₹104. The gap from yesterday’s close to today’s open explains how both can be true. If that gap appears in a historical Indian equity chart, check the series’ adjustment basis and whether a split or bonus changed the price basis before interpreting it.
A quick decision
The candle closes at ₹102 after opening at ₹100. Yesterday it closed at ₹104. What can you establish?
Two paths can produce one candle
Imagine two possible paths between the recorded extremes. In A, price visits ₹100 → ₹108 → ₹96 → ₹106. In B, it visits ₹100 → ₹96 → ₹108 → ₹106. Sketch a candle for each. Which lets you prove that the low came first?
Inspect the evidence
The sketches coincide. The daily record retains the extremes but loses their order. “The close was ₹2 below the high” is an observation. “Buyers returned late in the session” proposes a sequence. Both paths fit the observation. A careful analyst records that the sequence is unknown. Likewise, a lower wick alone cannot identify who traded or predict the following session.
Try a fresh case
Previous close ₹210. Today O ₹208, H ₹215, L ₹200, C ₹205. Find the lower wick, then decide whether “The ₹200 level will hold tomorrow” is supported. Explain your answer aloud or write one sentence before opening the worked answer.
Check the calculation and the claim
The lower edge of a falling body is the close, ₹205. The lower wick is ₹5. If you obtained ₹8, you measured from the open. The upper wick is ₹7 and the body is ₹3, which gives the ₹15 range. Price traded at ₹200 and closed above it that day. Another session would be needed even to observe a second test of that price.
Check the lower wick
Use the fresh example above. Which lower-wick measurement agrees with its falling body?
Bring context to the next candle
The same candle can appear inside a range, after a long advance or after a sharp fall. This lesson establishes its geometry. Later lessons will add prior price structure, volume and repeated tests of a level. Keep the two tasks distinct in your notes so a familiar shape does not become a conclusion by itself.
What should I check on an Indian equity chart?
Check whether the session is complete, whether the prices share the same adjustment basis, and whether a split or bonus changed that basis. Read the data source’s definition of close. A displayed official close can be calculated differently from a last-traded price. ChartLearn’s practice data is historical and anonymized. The current exercise asks you to describe the record you see.
Open the practice chart (test-site access required). Measure both wicks and record one observation in your Study Journal.