What it is
A candlestick chart is the standard way of displaying price data in forex and financial trading. Each "candle" on the chart represents a specific period of time — a 1-minute candle, an hourly candle, a daily candle — and shows four pieces of information about price during that period: the open, close, high, and low.
Candlestick charts were developed in Japan in the 18th century to track rice prices. They remain the dominant chart type used by traders worldwide — and the chart type used in MetaTrader.
How to read a candlestick
Each candle has two parts:
- The body: The thick rectangular section, representing the range between the open and close price for the period
- The wicks (or shadows): The thin lines above and below the body, representing the highest and lowest prices reached during the period
Colour coding
- Green (or white) candle: The close price was higher than the open price. Price rose during this period — a bullish candle.
- Red (or black) candle: The close price was lower than the open price. Price fell during this period — a bearish candle.
A worked example
A 1-hour EUR/USD candle shows:
- Open: 1.1000
- Close: 1.1045
- High: 1.1060
- Low: 1.0990
The candle is green (close higher than open). The body runs from 1.1000 to 1.1045. There's a small upper wick from 1.1045 to 1.1060 (price went higher but pulled back). There's a lower wick from 1.1000 to 1.0990 (price dipped briefly below the open before recovering).
Why it matters
Candlestick charts convey four times more information than a simple line chart (which only shows the closing price). The size of the body, the length of the wicks, and the pattern across multiple candles provide a rich picture of how buyers and sellers are interacting — who is in control, whether momentum is increasing or fading, and where potential reversals might occur.
For EA developers and traders evaluating strategies, candlestick patterns are a fundamental tool for identifying entry and exit conditions.
Common misconceptions
- Candlestick patterns are probabilities, not guarantees. A "bullish engulfing" pattern suggests a likely upward move — it doesn't guarantee one. Context (trend direction, key levels, news events) matters enormously.
- The timeframe changes everything. A bearish candle on a 1-minute chart means almost nothing on its own. A bearish candle on a daily chart after a 200-day uptrend is much more significant. Always consider the timeframe in context.
The Karnek note
Karnek is read-only monitoring for MetaTrader - it watches every account you run, live on one dashboard, and alerts you the moment something stops. It never trades and never asks for a trading password.
Written and reviewed by the Karnek Research team. Last updated August 2026.
Educational content only - not financial advice. Past performance does not predict future results. Trading carries significant risk.