Candlestick appearance

Japanese candlesticks are formed using OPEN, CLOSE, HIGH and LOW for the price at specific time.

(When we say "specific time", we mean time measure (time frame) that a trader has chosen to trade in. For example, a trader can trade hourly charts, daily charts, weekly etc. When trading hourly charts, for example, each candlestick will represent 1 hour, which means it will be formed based on data collected during one hour period). Here are examples of different time frames describing same data:

Now let's go back to candlesticks. 

We have met this picture earlier, but now let's learn some further details about it.

The major part of the candlestick is its body which represents a range between OPEN and CLOSE prices.

When OPEN for the price is above CLOSE, a candlestick body is filled.

When OPEN for the price is below CLOSE, a candlestick body is hollow.

Bodies can be colored at trader's choice. One of the common set up which we are also going to use for our charts is "red and green". So, "red" will stay for filled candlestick giving a signal that price has dropped, and green will stay for hollow giving a signal that price has gone up.

Also we can see price SHADOWS — the extensions above and below the candle body. The very top of the shadow above is called HIGH, the very bottom of the shadow below is called LOW.

A bullish or a bearish candlestick... What does that mean?

These terms describe two opposing forces on the market: bulls are traders who push the price up, and bears — they pull price down. So, when the price confidently climbs up — bulls are winning the game and the market therefore is called "bullish market", when the price is falling down — bears are taking over — bearish market.

The size of the candlestick, the length of its shadows, positioning on the chart gives a trader clues about market behavior.

The size of the candlestick tells how strong buying or selling pressure is. A long big candlestick symbols of a strong market pressure (buying or selling), whereas a small size candlestick means that buyers and sellers are in consolidation and buying/selling pressure is weak.

Shadows (tails) of the candlestick reveal activity of buyers and sellers. The upper shadow shows activity of buyers towards pushing the price up. The lower shadow represents sellers' activity towards pulling the price down. Long shadows occur during high activity coming from both sides — sellers and buyers — as they try to turn the price into their direction.

A small upper shadow plus a big lower shadow tells a trader that in the beginning sellers were dominant and forced the price down, but fell under the pressure of buyers at the end of the trading session. A big upper shadow plus a small lower one indicates that at first buyers took over the trade and pushed the price up, but eventually forced to give up facing strong sellers' pressure.

A candlestick with no shadows indicated that buyers (in case of a green candle) or sellers (red candle) were dominant during the whole trading session.

A candlestick that posses a small or no body and at the same time has small shadows indicates indecisiveness between buyers and sellers and a very little trading — a weak, slow trading market.

Sourcing:
http://www.forex-charts-book.com