Reading the market — candles, time, sessions
How professionals read a chart in the same way for two centuries — and why the time of day matters more than most beginners realise.
Last reviewed:
Reading the market in 90 seconds
A candle = 4 numbers (Open, High, Low, Close) on one rectangle. Timeframes pick the period. Sessions pick the audience.
- Each candle has a body (Open → Close) and two wicks (High, Low). Green/bull: close > open. Red/bear: close < open.
- Timeframes are just zoom levels: M5 = one candle per 5 min, H1 = one per hour, D1 = one per day. The picture is the same; the granularity changes.
- FX runs in four overlapping shifts: Sydney → Tokyo → London → New York. The London/New York overlap (13:00–17:00 UTC) carries ~70 % of daily volume.
- Spread tightens when London opens and again when New York joins. Spread widens around Asia-only hours and weekends.
- Sessions matter because the same chart looks different at different hours. A breakout into a thin Asia session ≠ a breakout into a London open.
Here is what 'sessions matter' looked like on August 5, 2024:
USDJPY shed ~12 yen in the Asian session and dragged equities with it — sessions matter, and so does crowding.
SourceAnatomy of a candle
Drag the open, high, low, close handles to see how the candle changes. Below: five real candles — which is bullish, bearish, or indecisive?
Bullish — close above open
Read each candle. Click to reveal the verdict.
What you're actually looking at
A candle is four numbers in one rectangle
Candlestick charts were invented by Japanese rice traders in the 1700s. They have not been improved upon — three centuries later, every Bloomberg terminal, every MT5 chart, every TradingView panel still shows the same shape, for the same reason: a candle packs the four numbers a trader needs (Open, High, Low, Close) into a visual that a human brain reads in milliseconds.
The body is a rectangle stretched from the Open to the Close. The top wick (or 'shadow') marks the High; the bottom wick marks the Low. A green (or hollow) body means the price closed higher than it opened. A red (or filled) body means it closed lower. The wicks tell you how much further price *tried* to go before pulling back.
Timeframes — same data, different zoom
M5, H1, D1, W1 — these are just zoom levels on the same chart. M5 means each candle compresses 5 minutes of price into one shape; H1 means each candle is one hour; D1, one day; W1, one week. The data underneath is identical — only how it's grouped changes.
Why this matters: a 'flat range' on H1 might be a perfectly clean uptrend on M5, or a brief consolidation in a much larger D1 downtrend. Professionals look at multiple timeframes to avoid getting fooled by zoom-level optical illusions. A common habit: scan the higher timeframe (H4 or D1) for direction, then drop to a lower one (M15 or H1) to time entries. We'll get to timing in later lessons; for now, just internalise that the timeframe is a choice, not a fact.
Sessions — when the audience is awake
Forex trades 24 hours a day on weekdays because someone, somewhere, is always at a desk. As Sydney winds down, Tokyo opens. As Tokyo closes, London opens. As London winds down, New York opens. As New York closes, Sydney reopens. Four overlapping shifts, one continuous market.
The hours in UTC (slightly approximate — exact opens shift with daylight savings): Sydney 21:00–06:00, Tokyo 00:00–09:00, London 07:00–16:00, New York 12:00–21:00. The four-hour overlap between London and New York (13:00–17:00 UTC) is the loudest window of the day. Most of the world's institutional FX flow times itself for that window, and it shows up on every chart as the tightest spreads, deepest order books, and cleanest moves.
What this means in practice: if you trade EURUSD, GBPUSD, EURGBP, you'll generally see the most actionable price action in London + NY overlap. If you trade USDJPY, AUDUSD, NZDUSD, you'll also see action in the Asian session. The same chart at 22:00 UTC on a Friday and 14:00 UTC on a Tuesday will *look* different — because the audience is different.
Key terms
Timeframes — picking your zoom level
Every chart is the same data; the timeframe is just how much time one candle compresses. Pick the one that matches what you're trying to see.
Granular intraday context, scalping setups, exact entry timing.
Scalpers, news traders, anyone watching a fill closely.
Balanced day-trader view. Many beginners practise on these.
Day traders, intraday breakout traders.
The 'working chart' for most retail traders. Trends are visible, noise is filtered.
Swing traders, position-sizers, most algo strategies in this course.
Trend direction, macro structure, long horizons. One D1 candle is a whole trading day.
Position traders, macro investors, any 'higher timeframe for direction' habit.
Sessions clock (UTC)
Where is the market awake right now? The bars below show the four major FX sessions on a 24-hour UTC dial.
UTC · Overlap with another session = deeper liquidity
Smallest of the four. Opens the week on Sunday evening UTC.
Asian liquidity centre. Best window for JPY pairs.
Largest FX centre by volume. EURUSD, GBPUSD, EURGBP wake up here.
Second largest. Overlaps with London for ~4 hours — the loudest window of the day.
Why sessions matter — Aug 5, 2024 in one chart
On Monday August 5th, 2024, the chart of USDJPY made textbook history. Watch what time it happened.
USDJPY shed ~12 yen in the Asian session and dragged equities with it — sessions matter, and so does crowding.
If you'd been looking only at the New York session that morning, you would have seen a sharp drop that 'came from nowhere'. The move actually originated in the Tokyo session over the weekend — equity-index futures unwinding the yen carry trade, with cascading margin calls hitting Asian funds. By the time NY opened, the largest part of the move had already happened. Same chart, very different stories depending on the session you watched. This is why professionals always know what session they're in.
SourcePractice — read three candles, find one session
10-minute practice — three candles, one session
Open your MT5 demo. Two tiny exercises that build the muscle memory you'll use every day from here.
- 1
Set the EURUSD chart to H1 (Hourly). Scroll back to last Tuesday around 13:00 UTC (right when London + NY overlap began). Click any single candle. MT5 shows the OHLC numbers in a tooltip — read them out loud.
- 2
Find three candles in a row: one green, one red, one with a long upper wick. Just naming them is the practice — you're training your eye to see structure, not predict the future.
- 3
Now switch to M5 on the same time window. Same data, but you now see ~12 candles for each H1 candle. Notice how a 'clean' H1 candle is usually a messy story on M5 — small consolidations, retracements, small fakeouts. The H1 view averages all of that into one shape.
- 4
Open the sessions widget on this page. Right now, what session(s) are open? If you're reading this during London + NY overlap, you should expect tighter spreads on EURUSD than during Asia-only hours.
Mastery check
Five questions on candles, timeframes, and sessions. Pass at 4 of 5.
Reading the market — quick check
Test your understanding with 5 questions. Pass with 4/5 correct.
Reflect
Reflection
Type your honest answers — saved on this device only. Use them next week to spot patterns in your trading thinking.
Pro deep dive — what's under the candle
If you came in already comfortable reading a chart, here's what's actually underneath those candles.
Tick aggregation — what 'a candle' actually is
Every candle is a compression of many individual ticks. Your broker receives upstream ticks (price changes) typically at 1–10 Hz on majors during active sessions, and writes them into MT5's internal price database. When you set the chart to H1, MT5 aggregates every tick within that hour into one candle — Open = first tick of the hour, High = max tick, Low = min tick, Close = last tick. Two consequences: (1) different brokers can show slightly different candles because their tick feeds differ; (2) weekend gaps appear because no ticks were generated between Friday close and Sunday open. The 'gap' is just the absence of data, not a market event.
Why the London / New York overlap is loud
FX dealing desks at major banks are concentrated in London, New York, Tokyo, and Singapore. Each desk's working day is 7–9 hours. When London and New York are both open, you have two of the three deepest dealing centres simultaneously active, which means: more liquidity providers quoting, tighter spreads, more genuine interest at each price level, and faster order flow. By contrast, during Asia-only hours, Tokyo + Singapore have to handle global flow alone — the order book is thinner, spreads widen, and moves can be jumpier because each transaction relatively moves the price more.
Daylight savings — the subtle disruptor
Sessions are anchored to local working hours, but local clocks shift twice a year (March/November in Europe and the US, opposite times in Australia). For about three weeks each year, London and New York are 'misaligned' with the rest of the world — the overlap window shifts by an hour relative to UTC. This shows up subtly: volatility windows on a chart don't match their usual UTC hours. Most professionals account for it implicitly; if you're systematic, you should hard-code the UTC times of London and NY open and let your model handle the local-clock drift.
Bibliography
Show answer
A candlestick encodes Open, High, Low, and Close — the four prices that summarise one period of trading. The body stretches from Open to Close (green if Close > Open, red otherwise), and the wicks reach to the High above and the Low below. The London/NY overlap (about 13:00–17:00 UTC) is the most liquid window because the two largest FX dealing centres on Earth are simultaneously open — more liquidity providers, tighter spreads, deeper order books, cleaner moves. Outside that window the same chart can move very differently.
Educational material only — not investment advice. Trading carries risk of capital loss. Always practice on demo and use a stop-loss. ← Back to Forex Basics