How to Read Candlestick Charts for Intraday Trading?


In the stock market, the price of different stocks and shares are totally dependent on the demand and supply chain. One of the most popular methods of investing in stocks is intraday trading, in which the seller and the buyer of the stock are required to trade on the same day or before the market closes.

Investors and traders use technical charts and tools to assess the current state of the market and predict future changes. Candlestick charts are one of the major technical analysis tools that traders use to know the previous and current state of stocks and trades, thus enabling them to make the right move. In this blog we are going to know more about Candlestick Charts and about how to read Candlestick Charts for Intraday trading.

An Introduction to Candlestick Charts

It is crucial to put the spotlight on what a candlestick chart is first before discussing Candlestick analysis. The Candlestick chart originated in Japan over 100 years before and around the eighteenth century. A Japanese Man, who was a rice trader, is known as the original creator of the candlestick chart. He believes that the supply and demand chain influence the price of rice. He also discovered that the emotions of traders also influence the market influence on higher notes.

Following this, the candlesticks in candlestick charts depict the size of price moves with different colours. Candlestick pattern in the stock market helps the traders to make the right decision based on the previous price fluctuations that help the traders to predict the short-term movement of the price.

Major components of Candlestick Charts

A candlestick chart comprises several horizontal bars called candles. All these candles have three major parts which include:
1. Upper Shadow
2. The body
3. Lower Shadow

A daily candlestick depicts the opening situation of the stock market, its high, low, and close price of the days, which is very much similar to a bar chart. This candlestick pattern has a wide part, which is known as the “REAL BODY”. This real body tells all about the price range of open and close of that day’s trading. When this real body is filled in, it signs that the close was lower than the open and vice versa.

Traders can customise the colour of the real body according to the trading platform they are using. It is also important to note that a candle has four major points of data which include:
1. Open- this depicts the first trade during the period specified by the candle
2. Low- this shows the lowest traded price
3. High- the highest traded price
4. Close- this depicts the last trade during the period specified by the candle

Tips to read Candlestick Charts for Intraday trading?

By reading a candlestick pattern a trader can know the price range of a particular stock for a specific period of time. The colour of the candle shows whether the price of a stock is rising or falling. By this, if a trader sees the monthly candlestick chart and finds consecutive red candles (each represents a day), then he can denote that the price of that stock is falling rapidly.

In a candlestick chart, there are some lines below and above the real body. These vertical lines called wicks or shadows depict the lows and highs of the traded price of the stock. A shorter wick on a red candle denotes that the stock opened near the high. A shorter wick on a green candle denotes that the stock closed near the high of that day.

This is how a candlestick chart shows the link between the opening, closing, low, and high of a particular stock price. You have to read the chart carefully according to the pattern of the body and shadows of a candle, which can be longer or shorter.

Different patterns in the Candlestick chart

Candlestick chart helps you to understand the clear link between demand and supply chain and how it influences the price of a particular stock. There are different patterns of candlestick charts, about which every trader should know, as it helps to make the right conclusion. We have categorized these patterns into two major categories

1. Bullish patterns and
2. Bearish patterns

Some Major Bullish Patterns

  • Hammer Pattern- This candle contains a short body and long lower wicks. It indicates a stronger buying pressure is moving the price up, despite the selling pressure.
    Inverted hammer pattern- It is located at the bottom of a downward trend which indicates the buying pressure and the selling pressure.
  • Bullish Engulfing Pattern- This pattern contains two candles one shorter and one larger. This indicates the bullish market situation, in which the price goes higher despite opening lower than the previous day.
  • Piercing Line Pattern– This pattern also contains two candles which indicate strong buying pressure.
  • Morning Star Pattern– This contains three candles with no overlapping. This indicates the reduction of selling price and the situation of a bull market.

Some Major Bearish Patterns

  • Hanging Man Pattern– This candle includes a short body and a long but lower wick. It is an indication of strong selling pressure that the buying thrust. 
  • Shooting star Pattern– This contains a short body and a long but upper shadow. It shows the selling pressure taking over the market. 
  • Bearish engulfing Pattern– This contains two candles which together indicate a slowdown of market rise and the chance of an upcoming downtrend.
  • Evening star Pattern– This contains three candles which altogether indicates the reversal of an upward trend.
  • Three black crow Pattern– This contains three red candles with short wicks. It shows the chance of an upcoming bear market.

How do we at Chart Analysis help you?

At Chart Analysis, we help you to know each and every aspect of the stock market and of different stocks. Here we help you to know the tips to read different technical charts. To know about candlestick pattern in Hindi, visit our YouTube channel “Chart Analysis”.


There are many other patterns included in Candlestick charts and the major ones are discussed above. This was all about how to read candlestick charts for intraday trading. It is important for you to know different patterns like a candlestick in the stock market, to make your prediction and decision of trading right. Stay tuned for more and happy investing.


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