# Candlestick anatomy and the ten-pattern path

**TA-02 · Technical Analysis · Core**

**Lesson question:** What does a candle reveal—and what does it omit?

Original fictional examples; educational writing, not live market data, orders or production approval.

## By the end

- Explain the mechanism in the lesson question.
- Reproduce the worked comparison and recognize its failure case.

**Prerequisites:** TA-01

A candle compresses an interval into open, high, low and close. The body spans open to close, and the shadows extend to the extremes. These four prices do not reveal the order in which the high and low occurred within the interval.

## Understand the mechanism

Body=|C−O|, upper wick=H−max(O,C), lower wick=min(O,C)−L. A long wick describes a visit and recovery, not proof of a dealer's intention. Engulfing normally compares real bodies; context distinguishes a hammer-like shape after a decline from the same shape inside chop.

## Walk through the process

Read location, sequence, confirmation and failure in that order. Premark relevant levels before seeing the pattern. The ten micro-lessons use explicit fictional geometry, not universal detection thresholds or historical win rates. Continuous markets can have different gap behavior from daily stock sessions.

## Pause before deciding

Describe what the example actually establishes and what remains unknown. A technical observation supplies context, not an automatic options entry. Contract cost, horizon, liquidity and the consequence of failure still need to match the thesis. Record the contrary branch so a named pattern cannot become an excuse to ignore new evidence.

## A worked example

With O=100, H=101, L=97 and C=100.50, the body is 0.50, lower wick 3.00 and upper wick 0.50. The lower wick is six times the body. A later close below 97 challenges rejection; later acceptance above 101 supports it. Both next-bar branches must remain possible.

## Calculation popup: Candle geometry

```text
Body=|C−O|; upper=H−max(O,C); lower=min(O,C)−L
```

OHLC does not establish intrabar high/low ordering.

1. Body=0.50.

2. Upper=0.50.

3. Lower=3.00.

**Result:** Lower wick/body=6; no predictive probability follows.

## Graph: Candlestick anatomy and the ten-pattern path—worked comparison

**Horizontal:** Candle component  
**Vertical:** Price units (USD)

Fictional data from the written example. The chart organizes the comparison; its shape is not a forecast.

Complete numerical data are embedded in `scripts/technical-analysis/TA-02.js` and displayed as an accessible table in the HTML lesson.

## What would invalidate the reading?

Naming a shape first and inventing its supporting trend afterward is hindsight. An incomplete candle can also lose its apparent pattern before the close.

## Check your understanding

### What are the body and lower wick?

**Answer:** 0.50 and 3.00.

**Why:** Use the open/close extrema, not the whole range.

### What is the critical failure to avoid?

**Answer:** Naming a shape first and inventing its supporting trend afterward is hindsight. An incomplete candle can also lose its apparent pattern before the close.

**Why:** Explain this risk before treating the example as a decision rule. A correct calculation does not guarantee a favorable market outcome. **Critical risk check.**

## Takeaway

Return to the question: What does a candle reveal—and what does it omit? State the observed facts, the assumptions and the failure condition separately.

## References and provenance

The cited references support definitions and conventions. The teaching prose, tickets and numerical scenarios are original; they are not attributed as historical market observations.

- [Fidelity Technical Analysis Guide](https://www.fidelity.com/learning-center/trading-investing/technical-analysis)

- [Fidelity Chart Patterns Reference](https://www.fidelity.com/quick-content/etf/help/research/learn_er_quotes.shtml)