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Wicks, range and where the close sits

Lesson 2 · about 9 min

The body tells you where the period ended. The wicks tell you where it went and could not stay. Together with the range, they let you compute one number, close location, that summarizes a candle better than any pattern name.

Wick arithmetic

The upper wick runs from the top of the body to the high. The lower wick runs from the bottom of the body to the low. Because the body's top is whichever of open and close is higher, the formulas are:

  • Upper wick = high − max(open, close)
  • Lower wick = min(open, close) − low
  • Range = high − low
  • Body = |close − open|
  • Check: upper wick + body + lower wick = range
Candle Open High Low Close Upper Body Lower Range
A 61.20 62.90 61.00 62.70 0.20 1.50 0.20 1.90
B 61.20 62.90 61.00 61.30 1.60 0.10 0.20 1.90
C 61.20 61.40 59.50 61.10 0.20 0.10 1.60 1.90

All three candles have the same range, 1.90. They tell completely different stories.

      A            B            C

      |            |            |
    +---+          |          +---+
    |   |          |          |###|
    |   |          |          +---+
    |   |          |            |
    |   |          |            |
    |   |        +---+          |
    +---+        +---+          |
      |            |            |
  • A: buyers moved price 1.50 net and held it. Small wicks, big body. A one-sided period.
  • B: price travelled to 62.90 and came back to nearly where it started. Buyers who bought anywhere in the upper wick are now underwater. The period was a failed rally.
  • C: the mirror of B. Sellers pushed to 59.50 and were fully reversed. Sellers in the lower wick are trapped.

Close location: one number for the whole candle

Close location = (close − low) ÷ (high − low). It runs from 0 (closed at the low) to 1 (closed at the high).

  • A: (62.70 − 61.00) ÷ 1.90 = 0.89. Closed near the high.
  • B: (61.30 − 61.00) ÷ 1.90 = 0.16. Closed near the low despite reaching much higher.
  • C: (61.10 − 59.50) ÷ 1.90 = 0.84. Closed near the high despite reaching much lower.

Close location ignores the open, which is a feature: it measures where the period settled within everything it explored. A candle that closes in the top 20% of its range is bullish for that period, whether the body was green or red. This is why an experienced reader will call candle C bullish even though it is technically a red candle (61.10 < 61.20). The 0.10 red body is noise; the 1.60 lower wick is the story.

Key idea: Wicks are the record of prices the market tried and rejected. Close location tells you which side won the period, independent of the colour of the body.

Range as a unit

Range is also your ruler. "A big candle" only means something relative to recent candles, so use the average range of the last N candles (ten or twenty is fine) as the unit. If the average daily range has been 1.20 and today's candle is 3.60, that is a 3× day: something changed. If it is 0.40, the market is asleep.

Most charting platforms compute this for you as Average True Range (ATR), which also accounts for gaps. For this course, plain average range is close enough, and you can compute it by hand:

Day Range
1 1.10
2 1.35
3 0.90
4 1.25
5 1.40

Average = (1.10 + 1.35 + 0.90 + 1.25 + 1.40) ÷ 5 = 1.20.

You will use this unit in Module 5 to place stops and in Module 2 to decide whether a wick is "long".

Wick length relative to body

The named patterns in Module 2 mostly reduce to a ratio: wick ÷ body. A wick that is two or three times the body is what turns an ordinary candle into a pin bar. Calculate it rather than eyeballing it, because chart scaling can make a modest wick look dramatic.

  • B: upper wick ÷ body = 1.60 ÷ 0.10 = 16. Unambiguous.
  • A: upper wick ÷ body = 0.20 ÷ 1.50 = 0.13. No rejection story at all.

A ratio between about 1 and 2 is the grey zone where most arguments happen. When in doubt, the candle is ordinary.

Both wicks long

A candle with long wicks on both sides and a small body says the period was volatile and indecisive: both sides pushed, neither held. Close location will sit near 0.5. This is common at the end of a strong move (the winning side is exhausted, the losing side is not yet in control) and in the middle of news events. It is not a directional signal by itself; it is a note that the previous certainty has gone.

Try it: Take the same ten candles from the previous lesson. Add columns for upper wick, lower wick, range and close location. Find the candle with the highest and lowest close location. Now look at what happened over the following three candles. Do not draw conclusions from ten samples; just get used to computing the numbers quickly.

Recap

  • Upper wick = high − max(open, close); lower wick = min(open, close) − low; the parts sum to the range.
  • Close location = (close − low) ÷ range, from 0 to 1, tells you which side won the period regardless of colour.
  • Use average range over the last 10-20 candles as the unit for "big" or "small".
  • Wick ÷ body ratios of 2 or more are where rejection stories start; below 1 there is no story.
  • Long wicks on both sides mean volatility without resolution, not a direction.

See it drawn

Original diagrams for the ideas on this page. Illustrative, not real market data.

The parts of a candlestickAn up candle and a down candle with the same high and low, labelled with open, high, low, close, the real body and the wicks.UP CANDLEclose above openHigh 41.00Close 40.30Open 38.20Low 37.40upper wickreal bodyopen to closelower wickDOWN CANDLEclose below openHigh 41.00Open 40.30Close 38.20Low 37.40Same high and low; only the open and close swap places.
The parts of a candlestick. One candle sums up a slice of time: the thick real body runs from the opening price to the closing price, and the thin wicks reach out to the highest and lowest prices traded. Colour tells you which way the body ran.
A range beside a trendOne chart swinging between a flat floor and ceiling, another stepping upwards inside a pair of sloping lines.Range-boundresistancesupportprice bounces between two levelsTrendingthe trend channelhigher highs and higher lowsA range has two flat edges; a trend has two sloping ones.
Range versus trend. On the left price keeps bouncing between the same floor and ceiling, which is a range. On the right each high and each low is higher than the last, inside a pair of sloping lines called a channel.