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Read one candle.
Leave the story open.

A practical first lesson in separating a price observation from a prediction.

Original Courtyard learning note · 10-minute exercise · Updated 14 October 2026

Your learning goal
Identify four prices on a candle, calculate its range and explain why those prices do not tell you what happens next. All figures below are invented, in arbitrary price units.
The observation deskIllustration · Not live data
An illustrative price candleA rising candle with an open of 100, a high of 106, a low of 98 and a close of 104. The body runs from open to close, and wicks mark the high and low. These invented values do not predict future prices.ONE HYPOTHETICAL TIME PERIODHigh · 106Close · 104Open · 100Low · 98
Observe what is there.Question what you assume.

Four values, one interval

A standard candle summarises prices over a chosen time interval. The open is the first price in that interval; the close is the last. The high and low mark its extremes. The wider body connects open and close; the thinner wicks extend to the high and low.

Our example opens at 100, reaches a high of 106 and a low of 98, and closes at 104. The close is above the open, so this candle has a rising body. Colours are a chart convention: always check the settings rather than assuming that one colour means the same thing everywhere.

Invented values for one interval
ObservationCalculationMeaning
Full range106 − 98 = 8Distance between the highest and lowest price.
Body size104 − 100 = 4Distance between open and close.
Upper wick106 − 104 = 2Distance above the top of the body.
Lower wick100 − 98 = 2Distance below the bottom of the body.

What the picture leaves out

These four values do not say whether the high happened before the low. Two very different sequences of prices can produce the same candle. Nor does a candle show every available order, the reasons people traded, the cost of execution or your own ability to place an order at an illustrated price.

A different interval can also change the appearance. One daily candle can contain many shorter candles. Choose the interval as part of the question you are studying, rather than changing it until a preferred story appears.

Try it: three observations, one question

Your observation card

  1. Write three factual statements about this candle without using the words “will”, “should” or “must”.
  2. Calculate the close-to-open change as a percentage of the open.
  3. Write one question you would need more information to answer.

Keep your answers in a notebook before opening the explanation below.

Read the worked explanation
Three facts: the close is 4 units above the open; the full range is 8 units; and both wicks are 2 units long. The close-to-open change is (104 − 100) ÷ 100 × 100 = 4%. A useful unanswered question is: “What sequence of prices occurred within the interval?” Another is: “What transaction costs would apply?” None of these facts predicts the next candle.

Notice when an observation becomes a claim

“The candle closed above its open” describes the supplied data. “The next candle will rise” adds a prediction the data does not establish. A more useful learning question is: “What additional evidence would I need to test that idea, including cases where it fails?”

This distinction is the point of the exercise. You are practising how to describe evidence and acknowledge uncertainty. You are not practising a recommendation to buy or sell.

Continue the practice

Record your three observations in the journal worksheet. Add your assumption in a different column so the two remain distinguishable when you review.

Open the journal field note

Original explanation and exercise: The Trading Courtyard, 14 October 2026. General chart conventions: see CME Group’s educational guide to bar and candlestick charts. This is a source for chart anatomy, not an endorsement of this publication.