Constructing compressed candlestick summaries

A two-pass construction drill

Editorial framing treats candlestick study as a two-pass construction drill. The first pass draws every bar from a declared open, high, low, and close. The second pass collapses the same window into one compressed-candlestick.

Candlestick reading is presented in those two constructions: compress several bars into one summary candle, or match the sequence to a named multi-bar pattern in its surrounding trend. Editorial reading treats a named pattern as a trade hypothesis only when both constructions agree.

Draw every bar from a declared rule

A candlestick is drawn from a period's open, high, low, and close. The candle-body is the rectangle between open and close. It is filled when the open is above the close and left unfilled when the close is above the open.

The same session can produce differently shaped candles across data sources because opening and closing prices may be defined as an average, a median, a first reported print, or another convention. Editorial practice is to declare that convention before the first bar is drawn.

Read the shadows as failed pushes

Shadows are the thin lines from that body to the period high and the period low. The upper-shadow records trade above the body that was not held into the close. The lower-shadow records trade below the body that was not held into the close.

A long upper-shadow is treated as a failed push higher given back before the close. A long lower-shadow is treated as a failed push lower given back before the close.

Compress the same window into one candle

A multi-bar sequence is compressed into one compressed-candlestick by taking the first bar's open, the last bar's close, and the highest high and lowest low of the entire group.

When a sequence contains a large gap, the named-pattern reading and the compressed-candlestick can disagree because the gap is not carried into the summary bar.

Match the sequence to a named pattern

A named candlestick pattern is treated as complete as soon as its last candle has finished forming.

A doji is a candle whose open and close sit at essentially the same level, leaving little or no body. A hammer is a small body near the top of the range with a long lower-shadow, read after a decline as a possible loss of downside follow-through. A harami is a smaller body contained inside the prior larger body, treated as a caution that direction is unresolved.

A tweezer uses matching highs or lows on neighboring candles to mark a short-term extreme. A rising-three-method is a continuation construction in which a long unfilled candle is followed by a small consolidating group and then another strong unfilled candle.

A two-bar dark-cloud-cover construction is described as clearer only when the second filled body reaches at least the midpoint of the prior unfilled body.

Ask other tools for confirmation

The material treats candlestick messages as needing confirmation from other technical tools rather than being used in isolation.