Imagine looking at a stock chart. It often looks like a chaotic sea of red and green boxes with thin lines sticking out of them. These are Japanese candlesticks. Instead of getting overwhelmed by the entire chart, let us focus on just one. A single candlestick tells a dramatic story of a battle between buyers and sellers over a specific timeframe, like a single day.

The Four Numbers: OHLC

Every candlestick is built using just four numbers. These are the Open, High, Low, and Close (OHLC). Together, they draw the candle's thick "body" and its thin "wicks" (the lines at the top and bottom).

• Open: The price at which the stock started trading when the market opened.
• High: The highest price the stock reached during the day.
• Low: The lowest price the stock touched during the day.
• Close: The final price at which the stock stopped trading when the market closed.

If the Close is higher than the Open, the candle is usually green, showing prices went up. If the Close is lower than the Open, the candle is red, showing prices fell.

Body vs. Wick: Conviction vs. Rejection

To read a candle like a professional, you must understand the relationship between the body and the wicks. The rectangular body represents conviction. A large body means one side (buyers or sellers) dominated the session from start to finish.

The thin wicks represent rejection. A long wick shows that prices went to an extreme, but the market rejected those prices and pushed them back before the session ended. This is where the real clues lie, especially near key support levels.

A Worked Example: The Long Lower Wick

Let us look at a scenario. Imagine "ABC Paints," a steady paint manufacturer. The stock has been falling for a few days and is approaching a known "support level" at ₹1,000—a price where buyers historically step in to purchase the stock. Let us calculate how a single day's candle reveals a change in market mood.

What does this tell you? During the day, sellers were powerful enough to crash the price past the ₹1,000 support level all the way down to ₹980. However, at that cheap price, buyers flooded in. They aggressively bought the stock, driving the price all the way back up to close at ₹1,015. The massive lower wick of ₹35 shows a strong rejection of lower prices.

When you see a long lower wick like this at a support level, it is a sign that the downward momentum is fading, and buyers are taking control.

You can practice spotting these key candlestick patterns and support levels by opening any stock's interactive chart on the stock-analyze.com analysis page.