Candlesticks, bars, line charts

A price chart is a compressed history of every negotiation between buyers and sellers. Learning to read one is like learning to read a map: at first it's lines and colours, but once you know the symbols, it tells you where the market has been, how it got there, and who was in control along the way. This lesson teaches you the three chart types you'll meet on every platform — and why most traders settle on candlesticks.

What you'll learn

• The four prices that build every chart: open, high, low, and close (OHLC)
• How line, bar, and candlestick charts display the same data differently
• How to read a single candle: body, wicks, and what each part tells you
• How to measure a candle in pips and describe it precisely
• The chart-reading mistakes that trip up almost every beginner

1. OHLC: the four prices behind every chart

Every chart divides time into equal periods — one minute, one hour, one day. For each period, four prices are recorded:

Line, bar, and candlestick charts are simply different ways of drawing this OHLC data.

2. Line charts: the big picture

A line chart connects the closing price of each period with a single line.

Strengths

• Clean and uncluttered — great for seeing the overall direction at a glance
• Useful on higher timeframes to spot major turning points

Weaknesses

• Throws away the open, high, and low — you can't see how far price travelled inside each period
• Hides volatility: a calm day and a wild day can look identical if they closed at the same price

Use line charts to see the forest; switch to bars or candles to see the trees.

3. Bar charts (OHLC bars)

Each period is drawn as a vertical bar:

• The top of the bar is the high; the bottom is the low
• A small tick on the left marks the open
• A small tick on the right marks the close

Bar charts show exactly the same information as candlesticks. Some professional traders prefer them because they are visually quieter. The drawback for beginners is that it takes longer to see at a glance whether a period closed up or down.

4. Candlestick charts

Candlestick charts were developed in Japan and popularised in the West in the early 1990s. Today they are the default on almost every trading platform, because they show direction and range instantly.

Each candle has two parts:

• The body — the rectangle between the open and the close
• The wicks (or shadows) — thin lines showing the high and the low

The body's colour tells you the direction:

• Bullish candle (commonly green or white) — the close is above the open. Buyers finished the period in control.
• Bearish candle (commonly red or black) — the close is below the open. Sellers finished the period in control.

5. Reading what a candle is telling you

A candle is a summary of a fight. Its shape tells you how that fight went.

Worked example: describing a candle precisely

(Illustrative prices.) A one-hour EUR/USD candle prints:

• Open 1.0850, High 1.0872, Low 1.0841, Close 1.0868

For most pairs, 1 pip = 0.0001. So:

• Direction: close (1.0868) is above open (1.0850) → bullish
• Body: 1.0868 − 1.0850 = 18 pips
• Upper wick: 1.0872 − 1.0868 = 4 pips
• Lower wick: 1.0850 − 1.0841 = 9 pips
• Total range: 1.0872 − 1.0841 = 31 pips

Reading: sellers pushed price 9 pips below the open early in the hour, but buyers took control, drove price up 31 pips from the low, and closed near the high. The body is more than half of the range — a confident bullish hour.

6. A candle only means something in context

A single candle is one sentence, not the whole story. The same long lower wick means very different things:

• At a major support level after a sell-off — possible sign that buyers are defending the level
• In the middle of a quiet range — probably just noise
• Right after a news release — often a reaction to wider spreads and fast order flow, not a reliable signal

In Module 3.1 you'll study candlestick patterns properly. For now, the key habit is: read the candle, then ask where it formed.

Common beginner mistakes

• Trading a candle before it closes. A candle that looks strongly bullish halfway through the hour can close as a long-wicked reversal. Until it closes, its shape is not final.
• Reading single candles in isolation, without looking at trend, levels, or the session they formed in.
• Assuming colour means the same on every platform. Check your settings.
• Forgetting that the daily candle depends on your broker's server time. Two brokers in different time zones can show different daily candles for the same market.

Key terms

Practice

1. On your demo platform, open a one-hour EUR/USD chart and switch between line, bar, and candlestick views. Notice what disappears in the line view.
2. Pick five recent completed candles. For each, write down the open, high, low, and close, then calculate the body, both wicks, and the range in pips.
3. For each of the five, write one sentence describing who was in control and how the period ended.
4. Find your platform's candle colour settings, and check whether the chart is drawn from the bid or the ask.

Quick recap

• Every chart is built from OHLC — open, high, low, close — for each time period.
• Line charts show closes only; bar and candlestick charts show all four prices.
• A candle's body shows open-to-close direction; its wicks show how far price travelled and was rejected.
• Describe candles in numbers to build an accurate eye.
• A candle only means something in context — and only once it has closed.