Candlestick charts

Definition. A price chart format that shows four data points for each time period (day, hour, minute) in a single graphical "candle." Originated in 18th-century Japanese rice trading; standard tool in modern technical analysis.

Anatomy of a candle

Each candle covers one period (commonly one trading day). Four prices are encoded:

                       │  ← high
                       │
                  ┌────┴────┐
                  │         │    ← body
                  │  open   │       top = max(open, close)
                  │         │       bottom = min(open, close)
                  │  close  │
                  └────┬────┘
                       │
                       │  ← low

Body color.
Green (or white/hollow) = close > open → price rose during the period.
Red (or black/filled) = close < open → price fell during the period.
Wicks (or shadows). The thin lines above and below the body represent the high and low reached during the period — i.e. how far the price moved from open/close in either direction.

How to read a single candle quickly

Long green body, small wicks. Strong buying through the day; close near the high. Bullish signal at the bar level.
Long red body, small wicks. Strong selling through the day. Bearish.
Small body, long upper wick. Buyers pushed price up, then sellers took it back. "Rejection at the high."
Small body, long lower wick. Sellers pushed price down, then buyers stepped in. "Rejection at the low" — often a short-term bottom signal.
Doji (open = close, basically no body). Indecision. The market couldn't pick a direction.

Common patterns (use with skepticism)

Pattern	Looks like	Reputed signal
Hammer	Small body at top, long lower wick	Bullish reversal at a downtrend bottom
Shooting star	Small body at bottom, long upper wick	Bearish reversal at an uptrend top
Engulfing (bullish)	Big green body that fully covers prior red body	Trend reversal up
Engulfing (bearish)	Big red body covering prior green	Trend reversal down
Doji at extreme	Tiny body after a strong move	Trend exhaustion

Honest caveats

Pattern-recognition on candle charts is a vast genre of trading literature, and most rigorous studies show that individual candle patterns have weak predictive power once trading costs are accounted for. Where candles are genuinely useful:

Quick visual summary. Reading 60 days of price action takes seconds with candles vs. minutes with a line chart.
Volatility intuition. Long wicks across many days = volatile, prone to overshooting; tight bodies = orderly trading.
Volume confirmation. A green body with above-average volume is more meaningful than the same body with thin volume. Always look at volume alongside candles.
Support/resistance context. A long-lower-wick (hammer) at a known support level — like the 200-day moving average — is more meaningful than the same candle in the middle of a range.

How to use this in research

When reviewing a held position's recent action: - Pull a 90-day candle chart (any free tool: TradingView, Yahoo Finance, Finviz). - Note: was the period trending or ranging? What's the volume pattern? - Look for divergences from the thesis: e.g., is the stock down on rising volume despite supportive thesis news? That's a noise-vs-signal question worth asking.

But again — at the lab, don't treat price action as evidence for or against a thesis. The standing rule (AGENTS.md #7) is that ticker noise is not thesis signal. Candles are most useful for execution (entry timing, position management), not for deciding what to own.

technical analysis (when written)
volume (when written)