Green and Red Candles

"Tags: green candle, red candle, up candle, down candle Prerequisites: how-candlesticks-work Green means the period closed above its open. Red means it closed below. Neither colour predicts the next candle. Questions this article answers What does a green candle mean? What does a red candle mean? Can a green candle occur on a down day? Why should candle colour not be treated as a buy or sell signal? 1. The basic convention A green candle commonly means the closing price was above the opening price for that candle's period. A red candle commonly means the closing price was below the opening price. Some chart systems use white and black, blue and red or other colours. Always verify the settings. 2. Green does not necessarily mean the stock rose from yesterday Suppose yesterday closed at Rs 100. Today opens at Rs 90 and closes at Rs 95. The daily candle is green because Rs 95 is above the Rs 90 open. However, the stock is still down Rs 5 compared with yesterday's close. 3. Red does not necessarily mean the stock fell from yesterday Suppose yesterday closed at Rs 100. Today opens at Rs 110 and closes at Rs 105. The daily candle is red because the close is below the open. Yet the stock is still up Rs 5 compared with yesterday's close. 4. Candle colour vs day change 5. Why this distinction matters Beginners often look at colour without checking the prior close or gap. The candle colour describes movement from the current period's open to close. The daily percentage change usually compares the current price or close with the previous close. 6. A large green candle A large green body means the close finished substantially above the open. It can show strong net buying during that period. However, after a prolonged rise it may also represent late excitement. Location and volume matter. 7. A large red candle A large red body means the close finished substantially below the open. It can show strong net selling during that period. During a long decline it may also appear near panic selling. The candle alone cannot identify the final low. 8. Closes near the extremes A green candle closing near its high shows that much of the advance was retained into the close. A red candle closing near its low shows that much of the decline was retained. This is useful descriptive information, not a guarantee of continuation. 9. Alternating colours A series of alternating green and red candles can indicate two-sided trade and lack of directional progress. The actual interpretation depends on range, location, volume and whether swing highs or lows are changing. 10. Common beginner mistakes Buying every large green candle A large candle can be late, extended or close to resistance. Selling every large red candle The stock may already be near support or within normal volatility. Ignoring gaps Colour can differ from the change versus yesterday's close. Assuming colour measures volume Candle colour does not show how many shares traded. Using colour without timeframe A daily green candle can exist inside a weekly red candle. 11. DStreet principle Colour describes one relationship: close versus open. Do not ask it to answer questions it was never designed to answer. 12. Beginner checklist Green commonly means close above open. Red commonly means close below open. Candle colour is not the same as change versus previous close. A gap can create a green candle on a down day or a red candle on an up day. Large candles require context. Colour does not measure volume or future direction. 13. Quick knowledge check Question: Can a green daily candle finish below yesterday's close? Answer: Yes. Question: Can a red daily candle finish above yesterday's close? Answer: Yes. Question: What relationship determines basic candle colour? Answer: Close versus open. Question: Does a large green candle guarantee another rise? Answer: No. 14. Next lesson Candle Bodies and Wicks. The next article explains how candle shape describes the path between the period's extremes and endpoints."