Candlestick charts are the most important technical analysis tool in trading. Learning to read them is a required skill for every trader. Register a Binance account to open the trading page and practice hands-on. Get the Binance APP to study charts anytime.
Basic Candlestick Structure
Each candlestick contains four pieces of price information: open, close, high, and low. The "body" (the thick rectangle) represents the range between open and close prices, while the "wicks" or "shadows" (thin lines above and below) represent the high and low.
If the close is higher than the open, the price rose during that period, and the candle is usually green (or white). If the close is lower than the open, the price fell, and the candle is usually red (or black). Note that Binance uses the international standard color scheme — green for up, red for down — which is opposite to some regional conventions.
What Different Timeframes Mean
Above the candlestick chart, you can select different timeframes. Each candle represents price movement during its corresponding period.
1-minute candles are for ultra-short-term traders watching instant fluctuations. 15-minute and 1-hour candles suit day traders. 4-hour and daily candles are for medium-term traders assessing trends. Weekly and monthly candles give long-term investors the big picture.
Beginners should start with daily charts. Each daily candle represents one day's price action — just the right amount of information without short-term noise.
Common Candlestick Patterns
Bullish engulfing (large green candle): Long green body indicates strong buying pressure and a significant price increase. Usually means bulls have a clear advantage.
Bearish engulfing (large red candle): Long red body indicates strong selling pressure and a significant price drop. Usually means bears are in control.
Doji: Very small body (barely visible) with long upper and lower wicks. Indicates an equilibrium between buyers and sellers — market indecision. A doji appearing after a sustained uptrend or downtrend often signals a potential reversal.
Hammer: Small body with a long lower wick and very short or no upper wick. Appearing at the end of a downtrend, it may signal a bottom.
Hanging man: Same shape as a hammer but appearing at the end of an uptrend, potentially signaling a top.
Candlestick Combination Patterns
Single candles provide limited information. Multiple candles together give more reliable signals.
Engulfing pattern: The subsequent candle's body completely engulfs the previous one. A green candle engulfing a red one may be bullish; the opposite may be bearish.
Morning star: Three candles — a large red candle, a small-bodied candle (the star), and a large green candle. Appearing at the end of a downtrend, this is a relatively strong bullish reversal signal.
Evening star: The opposite of the morning star, appearing at the end of an uptrend as a bearish reversal signal.
Combining Volume Analysis
The volume bars below the candlestick chart are an important auxiliary tool. Rising prices with increasing volume indicate strong buying power — the uptrend is more reliable. Falling prices with decreasing volume suggest selling pressure is easing — a bottom may be near. If price makes new highs but volume doesn't follow (volume-price divergence), watch out for a potential trend reversal.
Technical Indicator Assistance
Binance candlestick charts support overlaying various technical indicators. Common ones include Moving Averages (MA), Relative Strength Index (RSI), and MACD. Click the "Indicators" button on the chart to add them. Beginners can start by learning the moving average system — for example, adding 7-day, 25-day, and 99-day MAs. When a shorter MA crosses above a longer MA (a "golden cross"), it may signal a buy opportunity; the opposite ("death cross") may signal a sell.
Learning to read candlestick charts is a gradual process. Practice consistently during actual trading and summarize your experience along the way.