Read a falling candle

The red candle marked X represents 21 April 2023. During that day, Bitcoin closed at a lower price than it opened.

On a red candle, the open is at the top of the body and the close is at the bottom. Their positions are the opposite of a green candle. The wicks do not change: the top of the upper wick is the high, and the bottom of the lower wick is the low.

Every candle is formed through buying and selling during its period. Its shape can provide clues about which side applied more pressure. A tall green body can show strong buying pressure, while a tall red body can show strong selling pressure.

Studying candles and how price moves from one candle to the next is called reading price action. Some traders build their approach mainly around price action instead of adding technical indicators to the chart. Reading price action begins with noticing differences in candle shapes. The next chapter introduces three shapes and explains what traders may learn from them.