Chapter 19 · Candlestick Basics
What a candle is made of
Four numbers, one shape — and the body-to-range ratio that carries most of the information.
What one candle records
A candle compresses four numbers from one period into one shape: open, high, low, close. Everything in candlestick analysis is built from the relationship between those four, and nothing in it uses any other data.
| Part of the candle | Drawn from | What it tells you |
|---|---|---|
| Body | Open to close | The net result of the period |
| Upper wick | Top of the body to the high | How far up price went and was pushed back from |
| Lower wick | Bottom of the body to the low | How far down price went and was pushed back from |
| Colour | Close above or below the open | Which side finished ahead |
| Range | High − Low | How much ground was covered in total |
Worked: reading one candle properly
A share opens at Rs 412, trades as high as Rs 431, as low as Rs 405, and closes at Rs 428.
- Body = 428 − 412 = Rs 16, and green, because the close is above the open.
- Upper wick = 431 − 428 = Rs 3.
- Lower wick = 412 − 405 = Rs 7.
- Range = 431 − 405 = Rs 26.
- Body-to-range ratio = 16 ÷ 26 = 62%.
The same data looks different on every timeframe
| Timeframe | One candle covers | Typically used for |
|---|---|---|
| Monthly | A month | The primary trend over years |
| Weekly | A week | Position holding, filtering daily noise |
| Daily | One NEPSE session | The default for most Nepali investors |
| Hourly and below | Part of a session | Entry timing only — and NEPSE's session is short |
A pattern on the daily chart can vanish entirely on the weekly, because five daily candles collapse into one weekly candle whose open is Monday's open and whose close is Friday's close. Neither chart is more correct. They answer different questions, and you have to state which one you are trading before a pattern means anything.
Gaps, and how they happen on NEPSE
A gap is a candle whose entire range sits above or below the previous candle's range. NEPSE runs a pre-open auction before continuous trading begins, and that auction sets the opening price — so today's open can land well away from yesterday's close, and gaps do occur here. Daily circuit limits cap how far, which is why very large gaps are rarer on NEPSE than on markets without a band.
Saved in this browser only — there is no account to create. Clearing your browser data clears your progress.