A chart type showing four price points (open, high, low, close) for each time period as a "candle" with a body and wicks, widely used in technical analysis.
A candlestick chart is a style of financial chart used to describe price movements of a security, derivative, or currency. Each "candle" represents a specific time period (1 minute, 15 minutes, 1 day, etc.) and displays four data points: open, high, low, and close (OHLC).
The candle's body shows the range between open and close. A green (or hollow) body means the close was higher than the open (bullish), while a red (or filled) body means the close was lower (bearish). The thin lines extending above and below the body are called wicks or shadows — the upper wick shows the high, the lower wick shows the low.
Candlestick patterns are categorised as single-candle patterns (Doji, Hammer, Shooting Star), two-candle patterns (Engulfing, Harami), and multi-candle patterns (Morning Star, Evening Star, Three White Soldiers). In Indian markets, the Hammer pattern near support levels on HDFC Bank or Infosys is widely traded — it shows a long lower wick (sellers pushed the price down) followed by recovery (buyers stepped in), signalling potential reversal.
Japanese candlestick analysis was developed by Munehisa Homma, a Japanese rice trader in the 1700s, and popularised globally by Steve Nison. In India, it is the default chart type on platforms like Zerodha Kite, TradingView, and most broker terminals. Day traders typically use 5-minute and 15-minute candles, swing traders use daily candles, and long-term investors reference weekly candles.
While candlestick patterns provide useful visual cues, they should always be confirmed with other indicators. A bullish engulfing pattern at the lower Bollinger Bands with RSI below 30 is a much stronger signal than the pattern alone. Volume confirmation is equally important — a Hammer candle on 3x average volume carries far more weight than one on low volume. The most reliable patterns in Indian markets are those occurring at well-established support/resistance levels on liquid stocks.