Candlestick FAQ — Wicks, Doji, Patterns, and What They Prove

What do the wicks mean?

A wick shows how far price reached beyond the open-to-close range before returning.

A long upper wick means price traded up there at some point and did not close there. That is a fact about what happened, and it is genuinely useful.

What the wick does not tell you: when in the interval it occurred, how many times price went there, how much size traded at those prices, or whether it means anything about what comes next.

What is a doji?

A candle whose open and close are almost equal, producing a very small body with wicks on both sides. Price covered a range and finished where it started.

Conventionally read as indecision. Accurate as a description of that interval; as a prediction, it shares the weak evidential support of candlestick patterns generally.

Note that a doji on a thin market is often just two trades at similar prices, not a balance of buyers and sellers.

Do candlestick patterns actually work?

The evidence is much weaker than the volume of content implies.

Published studies report results from marginal edges to none, highly sensitive to market, timeframe, and the precise rules used to identify a pattern. There is no broadly reproduced finding that a named pattern predicts direction across markets and periods out of sample.

Specific problems with claimed win rates:

Definitions vary. How long must a hammer's wick be relative to its body? Different thresholds give different results from identical data.
Backtests overfit easily. Test enough variants and some look excellent by chance.
Examples are selected because they worked.
Timeframe changes everything. Resample the same trades and different patterns appear.

Anyone quoting "this pattern is 60% accurate" should be asked: what market, what timeframe, what definition, what period, and out of sample?

Why do two identical-looking candles mean different things?

Because a candle is a summary, and the summary discards how many trades produced it.

Two one-hour candles both showing open 100, high 105, low 98, close 103 render identically — even if one was built from 3,000 trades and the other from four. The first describes a market; the second describes four transactions.

CoinDock exposes trades_count per candle for exactly this reason. Most charting interfaces never show it.

Can I tell what happened inside a candle?

No. A candle gives four prices, not a path.

Open 100, high 108, low 99, close 101 could have gone up first then down, or down first then up. The candle does not encode the order.

To see inside, use a shorter timeframe — though on a thin market the shorter timeframe is mostly empty intervals.

Green and red — is that standard?

Direction conventions vary by platform, and some platforms colour by close versus the previous close rather than close versus open — a materially different thing.

Check the legend rather than assuming. The reliable reading is positional: identify the body edges and which is the open.

What is a Heikin-Ashi candle?

A variant where each candle is computed from averaged values rather than raw open/high/low/close. The result looks smoother and trends appear cleaner.

The trade-off is important: Heikin-Ashi candles do not show actual prices. The open and close you see were not traded. They are useful for visualising trend and unsuitable for anything requiring a real price — including judging where you could actually have transacted.

Should I read candles on a newly listed token?

Cautiously, and only after checking trade counts.

Early candles are built from very few trades, so shapes resembling textbook patterns appear constantly by chance. A long wick is usually one market order on an empty book, not rejection.

The more useful questions at that stage are whether you could sell, and whether the contract permits it. See reading token price action.

What is the single most useful thing candles tell me?

Volatility at a glance. Body and wick sizes show how much range each interval covered and how much was rejected — a real, immediate observation requiring no predictive claim.

A close second: spotting data problems. A single enormous wick on an otherwise quiet chart usually means a thin book and one aggressive order, which is diagnostic information about liquidity rather than a market event.

Candlesticks — Frequently Asked Questions