Candlestick
A candlestick is a price chart element that represents the open, high, low, and close of a security for a given time period, using a filled body for the open-close range and wicks for the high and low extremes. Candlestick charting, originating in Japan, is the dominant chart type used on Indian equity and F&O trading platforms.
Each candlestick encodes four data points: the open, high, low, and close of the session. The body of the candle spans from the open to the close; a hollow or green body indicates the close was above the open (a bullish candle), while a filled or red body indicates the close was below the open (a bearish candle). The wicks, or shadows, extend from the body to the session's high and low, showing the full price range traded.
Candlestick patterns — formed by one, two, or three consecutive candles — are interpreted as historical signals of potential trend continuation or reversal. On NSE trading platforms such as Kite (Zerodha), Pi, and others, candlestick charts were the default display format, and patterns such as the doji, hammer, engulfing, and shooting star were routinely discussed in market commentary and trading education.
The visual clarity of candlestick charts, particularly the ability to quickly distinguish bullish and bearish periods by colour, contributed to their widespread adoption. Compared to line charts, which display only the close, candlestick charts convey significantly more information about intraday price dynamics and the relationship between buyers and sellers within each session.
Candle colour conventions can vary across platforms. While green-bullish and red-bearish was the most common convention on Indian platforms, some older platforms used white-bullish and black-bearish. Participants switching between platforms occasionally encountered this variation, which is purely cosmetic and carries no analytical implication.
A misconception is that candlestick patterns provide reliable standalone trading signals. Academic and empirical studies on candlestick patterns have produced mixed results, and the patterns' reliability varies significantly by market, timeframe, and broader trend context. On Indian markets, candlestick patterns are most usefully treated as one lens for observing price behaviour, integrated with other analytical tools such as support-resistance levels, volume, and trend context, rather than as self-contained signals.