A candlestick in trading represents 4 pieces of information.

The open price, close price, highest price and lowest price for a given “time” period.

Common used time periods are
1 minute
5 minute
15 minute
30 minute
1 hour
4 hour
1 day
1 week
And 1 month

And depending on your chart setting the colour will be different for an open price lower than the close price or a different colour for open price higher than the close price. Eg. red if price is closed lower and green if price closed higher.

Imagine I own a gold shop, and every day, I open and close the shop with different gold prices. Let me explain this in a simple way using what we call a “candle” in trading.

When I open my shop in the morning, the price of gold is $2,500. This starting price is called the open of the candle. By the time I close the shop at the end of the day, the price of gold has risen to $2,600. This final price is called the close of the candle.

Throughout the day, the price of gold fluctuates. At one point, it reaches its highest level of $2,700. This is known as the high of the candle. On the flip side, the lowest price of the day goes down to $2,400. This is the low of the candle.

Now, the body of the candle represents the difference between the open and close prices, so in this case, it’s the area between $2,500 and $2,600. Any prices that fall above or below this body—like the high of $2,700 or the low of $2,400—are represented by the wick (or shadow) of the candle.

So, if this were a daily candle, it visually shows the range of gold prices for that day: the body tells you where the price started and ended, and the wick tells you the highest and lowest points the price reached during the day.

Of the four prices indicated by a candlestick, the most important is the Close.

The least important is the opening price. Forex is a non-centralised market and as a result the Open often shows varations between different information providers: this can make certain types of candle, such as doji’s, less reliable in forex. It follows that if the High or Low of a candlestick is also the opening price, that price would likewise be suspect.

Actually, I am confused with the question. Is it about candlestick or candlestick pattern ?

Btw, I just want to add that:

To have a good understanding about candlestick formation, we need to understand price action. For example, formation in H1, can be explained by price action on M15 or M5.

In real, engulfing candle is famous to indicate reversal. It’s not always. When engulfing is spotted on H1, it’s an early sign that has to be confirmed at lower TF, such as M15. When we can see there is breakout, the engulfing is a good to go signal.

That’s all

Candlesticks are used to visualize price movements in assets like stocks, commodities, or cryptocurrencies. Originating in Japan, candlestick charts provide insights into market sentiment and potential future price action by showing the open, high, low, and close prices over a specific period. Mastering their essence will give you an effective and efficient trading experience

1. Candlestick Structure

Each candlestick represents a single time period (e.g., a day, hour, minute) and has two main parts:

• Body: The rectangle part shows the difference between the opening and closing prices.
  • If the closing price is higher than the opening price, the body is often green (or white), indicating bullish (upward) movement.
  • If the closing price is lower than the opening price, the body is often red (or black), indicating bearish (downward) movement.
• Wicks (or Shadows): Thin lines above and below the body representing the highest and lowest prices reached during the period.

2. Basic Candlestick Patterns

Candlesticks are particularly valuable for identifying patterns that indicate potential reversals or continuations in price trends. Here are some common ones:

• Doji: Has a very small body with long wicks, suggesting indecision in the market. It can signal a possible reversal if it appears after a sustained trend.
• Hammer: A small body at the top of the candlestick with a long lower wick, indicating a potential bullish reversal, especially after a downtrend.
• Shooting Star: The opposite of the hammer, with a small body at the bottom and a long upper wick. It can signal a bearish reversal.
• Engulfing Patterns:
  • Bullish Engulfing: A small red candlestick followed by a large green one, indicating a bullish reversal.
  • Bearish Engulfing: A small green candlestick followed by a large red one, signaling a bearish reversal.
• Spinning Tops: Candlesticks with small bodies and long wicks on both sides, showing indecision and potential trend weakening.

3. How Candlesticks Indicate Market Sentiment

Candlesticks provide clues about the balance of power between buyers and sellers. By understanding patterns, traders aim to identify if the market is likely to continue its current trend, reverse, or stay sideways.

• Bullish Patterns: These suggest that buyers are gaining control, potentially pushing prices higher. Bullish patterns are usually identified at the bottom of a downtrend.
• Bearish Patterns: These indicate that sellers are in control, potentially driving prices down. They’re often identified at the top of an uptrend.

4. Reading Multiple Candlesticks Together

Candlesticks are often more useful in groups rather than individually. Some patterns like morning star (a bullish reversal pattern) or evening star (a bearish reversal pattern) involve three candlesticks that, when combined, provide insights into potential reversals.

5. Tips for Using Candlestick Charts

• Confirm with Indicators: Use candlestick patterns in conjunction with other indicators, like moving averages, RSI (Relative Strength Index), or MACD (Moving Average Convergence Divergence), for better accuracy.
• Understand Market Context: Patterns are more reliable when they align with the overall trend or appear near support and resistance levels.
• Practice: Studying candlestick patterns in historical charts and using demo accounts can help develop pattern recognition skills without financial risk.

Summary

Candlesticks offer a visual summary of price action over time and allow for interpretation of market sentiment. By learning and recognizing various candlestick patterns, traders can make more informed decisions about market entries and exits.