How candles combine

In the previous chapter, you saw the twelve five-minute periods between 18:00 and 19:00. Each period appears as a separate candle on a five-minute chart. These twelve candles can also be combined into one hourly candle. This process is called aggregation.

In this chart, the first five-minute candle is marked A and the last is marked B. The panel on the right shows the hourly candle formed from all twelve candles.

Look at the hourly candle in the panel. Focus on its upper wick, then look back at the five-minute candles between A and B. Some of those candles reached prices above where the hour opened. When all twelve candles are combined, those higher prices form the upper wick. Prices also moved slightly below where the hour closed, forming the short lower wick.

When the twelve candles are aggregated, their volume is combined as well. The hourly volume is calculated by adding the volume from all twelve candles.