Every chart on Momentum IQ uses candlestick charts โ the most informative and widely used chart format in the world. Before studying individual candlestick patterns, you must understand what a single candle is telling you. This guide explains everything from scratch.
What is a Candlestick?
A candlestick represents price activity during a specific time period โ one day, one hour, 15 minutes, or any other timeframe. Each candle contains exactly four pieces of information:
The Four Price Points โ OHLC
| Price Point | Meaning | On the Candle |
|---|---|---|
| Open (O) | Price when the session began | Bottom of green body / Top of red body |
| High (H) | Highest price reached during the session | Top of the upper wick |
| Low (L) | Lowest price reached during the session | Bottom of the lower wick |
| Close (C) | Price when the session ended | Top of green body / Bottom of red body |
On NSE, the daily candle opens at 9:15 AM and closes at 3:30 PM IST. The body shows where price was at open and close. The wicks show the full range that price explored during the day.
Green vs Red โ Who Won the Session?
The body colour tells you immediately who won the battle between buyers and sellers:
- Green candle (bullish) โ Close is HIGHER than Open. Buyers were stronger. Price ended above where it started.
- Red candle (bearish) โ Close is LOWER than Open. Sellers were stronger. Price ended below where it started.
What the Body Size Tells You
- Large body โ one side dominated the entire session with conviction
- Small body โ neither side had clear control โ indecision
- No body (Doji) โ open and close are identical โ complete standoff
What the Wicks Tell You
Wicks (also called shadows or tails) show how far price moved BEYOND the open-to-close range. They reveal price rejection โ levels that were tested but not accepted by the market.
- Long upper wick โ buyers pushed price up but sellers rejected it and pushed back down. Bearish sign.
- Long lower wick โ sellers pushed price down but buyers stepped in and rejected it. Bullish sign.
- No wicks โ one side controlled the session completely from open to close (Marubozu)
Reading a Candle โ The Full Story
Every candle tells a complete story about the session. Here is how to read a typical daily NSE candle:
Open: โน1,480 | High: โน1,510 | Low: โน1,465 | Close: โน1,498
Reading: The session opened at โน1,480. Buyers pushed price up to โน1,510 but faced selling pressure and pulled back. Then sellers pushed price down to โน1,465 but buyers stepped in strongly. By close, buyers had pushed price back to โน1,498 โ above the open. Result: Green candle with a medium body, a moderate upper wick (sellers at the top), and a notable lower wick (buyers defended the lows).
Story: Buyers ultimately won the session but faced resistance at โน1,510 and tested buying interest at โน1,465.
Multiple Candles Together โ Reading the Flow
Individual candles are informative, but reading multiple candles together reveals the bigger picture:
Timeframes โ Same Stock, Different Candles
The same stock looks completely different on different timeframes. Each candle represents the OHLC for its specific period:
| Timeframe | Each Candle = | Used for |
|---|---|---|
| 1-minute | Price activity in 1 minute | Scalping |
| 15-minute | Price activity in 15 minutes | Intraday trading |
| 1-hour | Price activity in 1 hour | Short-swing trading |
| Daily | Full NSE trading session (9:15โ3:30 PM) | Swing trading (most common) |
| Weekly | Full trading week (MonโFri) | Positional / investing |
The Three Things Every Candle Shows
1. Who won? โ Green = buyers. Red = sellers.
2. By how much? โ Large body = decisive win. Small body = close contest.
3. Did price get rejected anywhere? โ Long wick = price was pushed back from that level.
Common Beginner Mistakes
- Focusing on candle colour only โ A big green candle with a massive upper wick is NOT a strong bullish signal. Read the full candle.
- Trading single candles without context โ A Hammer is only meaningful after a downtrend at a support level. Context is everything.
- Ignoring timeframe โ A bearish daily candle means nothing if the weekly trend is strongly bullish.
- Reacting to every candle โ Most candles are noise. Wait for significant patterns at significant price levels.
