Candlestick Basics
OHLC + Candle Psychology
Candlesticks are the most important language of the market. Every candle tells a story of buyers vs sellers. In this module, you will learn OHLC, candle body/wick psychology, candle strength, gaps, candle closing importance, and multi-timeframe candle concept.
What You Will Learn
Module 2 Lesson Map
Learn candles like a professional. This module is your foundation for Price Action.
Interactive Candle Lab (Live OHLC Formation)
Start a candle and watch how OHLC forms in real-time. This is how candles are created in the live market.
Candle Controls
📌 Close is the final price.
📌 High/Low are extremes during candle lifetime.
Weak candle = long wick + small body.
Wick Rejection Simulation (Buyer vs Seller Trap)
Wicks show rejection. This simulation helps you understand how stop hunts and reversals appear in candles.
Rejection Scenarios
📌 Lower wick means price tried to fall but got absorbed.
Gap Up / Gap Down Simulation
Gaps happen due to news, global markets, and overnight sentiment. Learn how gap candles behave.
Gap Scenarios
📌 Gap Down means new open is below previous close.
📌 Gaps are controlled by overnight sentiment.
Candle Closing Importance Simulation
Many beginners enter trades before candle closes. This simulation shows why confirmation matters.
Close Simulation
Entering before close can trap traders.
Multi-Timeframe Candle Concept Simulation
A 1-hour candle is made of many 5-minute candles. Learn why timeframe selection matters.
MTF Controls
Higher timeframe shows structure.
Professionals always respect higher timeframe candles.
Lesson 1: What is a Candle?
A candle is the most basic building block of a price chart.
A candlestick represents the price movement during a specific time period. That time period can be 1 minute, 5 minutes, 1 hour, daily, weekly, etc.
Why Candles Matter?
- They show market direction
- They show buyer vs seller dominance
- They show rejection and acceptance
- They show trend strength
Lesson 2: OHLC Explained (Open, High, Low, Close)
Every candle is made of 4 key values.
OHLC Definition
- Open: first traded price of candle
- High: highest traded price of candle
- Low: lowest traded price of candle
- Close: last traded price of candle
Quick Example
If a 5-minute candle opened at 100, went up to 110, fell to 95, and closed at 105, then OHLC = 100/110/95/105.
Lesson 3: Bullish Candle vs Bearish Candle
The candle color is determined by Open and Close.
Bullish Candle
A bullish candle forms when Close is higher than Open. It shows buyers controlled the candle.
Bearish Candle
A bearish candle forms when Close is lower than Open. It shows sellers dominated.
Lesson 4: Candle Body, Wick, Shadow Psychology
The body shows control. Wick shows rejection.
Candle Body
The body represents the distance between Open and Close. Bigger body means stronger movement.
Upper Wick
Upper wick shows price tried to go up but got rejected by sellers.
Lower Wick
Lower wick shows price tried to go down but buyers absorbed the selling pressure.
Lesson 5: Candle Strength vs Weakness
Not every bullish candle is strong, and not every bearish candle is weak.
Strong Bullish Candle
- Large body
- Close near high
- Small upper wick
Weak Bullish Candle
- Small body
- Long upper wick
- Close not near high
Strong Bearish Candle
- Large body
- Close near low
- Small lower wick
Lesson 6: Candle Formation in Live Market
A candle changes every second until it closes.
Many traders think a candle is fixed, but in reality a candle is dynamic. During live market, the close keeps changing.
Live Candle Reality
- A bullish candle can become bearish before closing
- A breakout candle can fail before closing
- Wicks grow when rejection happens
Lesson 7: Gap Up / Gap Down Candles
Gaps show strong overnight sentiment.
Gap Up
Gap up happens when market opens above previous day close. This usually happens because of positive global sentiment or news.
Gap Down
Gap down happens when market opens below previous day close. This happens due to negative news or fear sentiment.
Gap Fill Concept
Sometimes price returns to fill the gap. This is known as gap filling. But gap filling does not happen every time.
Lesson 8: Candle Closing Importance
Candle close decides confirmation.
Why Close is Important?
- Close confirms direction
- Close confirms breakout
- Close confirms reversal rejection
- Close shows real control
Trap Example
Many candles break resistance during formation but close below resistance. This creates a fake breakout trap.
Lesson 9: Multi-Timeframe Candle Concept
A higher timeframe candle is made of multiple lower timeframe candles.
Example
A 1-hour candle contains 12 candles of 5-minute timeframe. A daily candle contains many intraday candles.
Why It Matters?
- Higher timeframe shows trend bias
- Lower timeframe shows entry precision
- Strong candles on HTF have more impact
Module 2 Quiz (Candlestick Understanding)
Test your candle knowledge before moving to Module 3.