Technical analysis starts from a premise: the price already incorporates every known piece of information, and the behaviour of buyers and sellers leaves readable traces. Its alphabet is the Japanese candlestick.
Anatomy of a candle
Each candlestick sums up a period (a day, an hour…) with four prices: the open, the close, the high and the low. The body links the open to the close; the wicks show the extremes reached and then rejected.
What the wicks tell you
- A long lower wick: sellers pushed the price down, but buyers took back control — the sign of a support.
- A long upper wick: buyers failed to hold the highs — selling pressure.
- A tiny body (a doji): indecision, a balance between the two camps.
A single candle says nothing
The beginner's mistake is to over-read an isolated candlestick. A signal only means something in context: where does it sit in the trend? At which key level? On what volume?
Choosing your timeframe
The same stock tells different stories on a 5-minute, a daily or a weekly chart. The shorter the unit, the more noise dominates. For an investor, the daily or weekly timeframe is almost always the right scale.
À retenir
- ✓A candlestick = four prices (open, close, high, low).
- ✓Wicks reveal price rejections: often more informative than the body.
- ✓A candle only means something in context; noise increases on short timeframes.