The candle and the timeframe
Lesson 2 of 23 in the course “Technical Analysis”. Free, with animations and a quiz.
Four prices in one candle
A candle shows what price did over a stretch of time. The body runs between the open and the close. The wicks, or shadows, reach the high and the low. If the close is above the open the candle is green, if below, red. Remember “body” and “wick”: later they decide how to draw levels properly.
The shape is the story of a fight
Every candle is a short fight between buyers and sellers. The body shows who won by the close, and the wick shows where price was dragged but couldn’t stay. A long upper wick means nobody wanted to buy up there. Such a candle at resistance is the first hint that the rise is weak.
The timeframe is the zoom
A timeframe is how much time fits in one candle: 5 minutes, 1 hour, 1 day, 1 week. 24 hourly candles add up to one daily. The bigger the timeframe, the more its signals matter: a daily level beats an hourly one. The pro rule is top-down: first week and day to see the trend, then hours to find the entry.
A bit of history
Candle charts were born in Japan, where 18th-century traders swapped rice contracts on the Dojima exchange. Tradition links the method to merchant Munehisa Homma, who wrote about market psychology. In the West candles became the standard after Steve Nison’s 1991 book. Today they’re the default chart in TradingView and on every exchange.
Check yourself
- A candle opened at 100, went up to 108, down to 97 and closed at 104. Where is its body?
Correct answer: From 100 to 104, a green candle. The body runs from open to close: 100 → 104. Close above open, so it’s green. 97 and 108 are the wick ends. - A candle at resistance has a long upper wick. What does it mean?
Correct answer: Price was lifted but sellers pushed it back: the rise is weakening. A wick is the trace of a failed attempt. An upper wick at resistance means price couldn’t hold higher. Not a signal on its own, but a reason to be careful. - Leo sees a rise on the 5-minute chart and a fall on the daily. Where should the analysis start?
Correct answer: From the daily: the higher timeframe sets the main trend. Analysis goes top-down. A rise on 5 minutes inside a daily fall is most often just a pullback. The lower timeframe is for a precise entry, not for picking a side.