How to read Candlestick Chart Patterns for Intraday Trading

How to read Candlestick Chart Patterns

Hello investors, today we will talk about how to read Candlestick Chart Patterns for Intraday Trading.

To start with the very basics, you need to know that the candlestick charts are used for Intraday Trading.

Intraday trading refers to buying and selling of stocks within the same trading day. So, an Intraday Trader usually tries to buy a stock with a lower value and sell it as it reaches a high value. This requires you to have in-depth knowledge of the share market and have to devote your lot of time watching the fluctuations in the rate of the stock you have purchased. A good stock market course can help you in this.

Also, the demand and supply rule along with many other factors such as the performance of the company, the economic condition of the company, the political stability plays a crucial role in determining the rate of the stock. 

Candlestick Chart is a tool available for such traders who can’t monitor and we know you can’t be on top of all the factors.

What are Candlestick Charts?

In the eighteenth century, there was a Japanese rice trader – Munehisa Homma who was a well-known rice trader with strategies. He is the original creator of this Candlestick Chart. It was modified later and it had reached the form it is today.

Homma used to say that there is a link between demand and supply of rising and the emotions of traders. The emotions of traders were primarily responsible for such movements in the rates of rice. Similarly, Candlesticks are the visual representation of the size of price fluctuations. It is used to determine the direction in which the price would go in the near future.

How does a Candlestick Chart look like?

There are three components or parts of a candlestick chart:

  1. The body
  2. Upper shadow
  3. Lower shadow

The Body is often colored red or green and each of the candles is the representation of a time period and the data tells the trades that were executed during that time.

There are four points of data shown by a candle.

  1. Open – this is the first trade of the period that is depicted by the candle.
  2. High – this is the highest trade price.
  3. Low – this is the lowest trade price during the period.
  4. Close – the trade performed during the trading period.

How to Read Candlestick Chart Patterns?

The body of the candle determines the opening and the closing rates or price of the trading day. This enables the traders to see the change in the price of the stock over that time period.

Furthermore, the color of the candle helps in knowing whether the prices of that stock raised or have fallen down.

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Let us see an example and try and understand the above thing. Say, there is a Candlestick Chart for a month and each candle is for a day, then, if the most color is red or in other words, red is the color of many consecutive candles means the price of that stock is falling.

Above and below there are verticle lines also called, Wicks or Shadows. These Wicks or Shadows help in knowing the low and high price of traded price of the stock.

Let us understand this below in a better way.

  1. Assume that if the upper Shadow of a candle is short, then it means that the stock had opened with the highest value on the day.
  2. Apart from this, if the upper Shadow is short, this means that the stock ended with the highest price on that trading day.

Let us try to make a conclusion from the above points.

The candlestick chart helps in knowing and drawing a relation between the high, low, opening, and closing prices of the stock.

The body can be long or short, and the color can be red or green. In addition, the Shadows can be long or short. These combinations are used to display the sentiments of the market for the particular stock.


Intraday Trading is often considered a risky investment as there are high chances of losing money. Without proper knowledge of the market, you can get a loss of your hard-earned money. There are many stock market courses available in the market that will guide you learn intraday trading. Still, I will highly recommend The Thought Tree as they provide you both practical and theoretical knowledge. 

You can also use simple tools like Candlestick Charts and other movements of the stock helps in making a better investment and can earn you a handsome profit within a day.

I hope this article would have helped you with some new information and you will use this for your later investments.

Happy Trading, Happy Investing!


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