FoundationsICT Trading Education
Understanding OHLC Candles: What Open, High, Low and Close Tell You
Every candle is a compressed story of a time period — who was in control, where they pushed price, and where it ultimately settled. ICT analysis begins with reading that story correctly from open to close.
The Inner Circle Traders
9 min read
Foundations — Article 6 of 8
Key Takeaways
- The Open marks where the session or candle period began — a reference level for the entire candle.
- The High and Low show the full range of price exploration during the period.
- The Close is the most important price — it shows where the period ended and who won the battle.
- Candles closing near their high indicate bullish control. Closing near their low indicates bearish control.
- The relationship between Open and Close determines candle colour — not the direction of price travel.
- ICT uses OHLC data from daily, weekly and monthly candles as key reference levels for bias.
What OHLC Means
OHLC stands for Open, High, Low, Close. These are the four data points that define every candlestick on any chart, on any timeframe. Open is the first price traded when the candle began. High is the highest price reached. Low is the lowest price reached. Close is the last price traded when the candle ended.
A candlestick is simply a visual representation of these four numbers. The body of the candle spans from Open to Close. The wicks (or shadows) extend from the body to the High (upper wick) and to the Low (lower wick). If Close is above Open, the body is typically shown in green or white — bullish. If Close is below Open, the body is red or black — bearish.
The timeframe of a candle determines what period those four prices cover. A 15M candle covers 15 minutes of trading. A daily candle covers one full trading day. A weekly candle covers Monday open to Friday close. The OHLC data is the same in structure across every timeframe — only the time period changes.
The Open: Why It Matters
In ICT analysis, the Open is not just the starting price — it is a reference level. The daily open, the weekly open, and the monthly open are treated as significant price levels that institutions reference when setting their order flow.
The New Day Opening Gap (NDOG) and New Week Opening Gap (NWOG) are both based on the relationship between where one candle closes and where the next opens. Gaps between the close of one period and the open of the next are imbalances that price frequently returns to fill.
During a trading session, price frequently returns to the opening price of the day. ICT teaches that the daily open is a magnet — price will often revisit it during the session before moving toward the daily draw on liquidity.
High and Low: The Range
The High and Low define the candle range — the territory explored during that time period. In ICT, previous highs and lows are the most important reference levels because they show where liquidity is resting.
Equal highs are formed when price makes two or more highs at the same level. Equal lows form the same way. These levels accumulate resting buy stops (above equal highs) and sell stops (below equal lows). ICT uses these as targets — the draw on liquidity.
Previous Day High (PDH), Previous Day Low (PDL), Previous Week High (PWH) and Previous Week Low (PWL) are all derived from the High and Low of those respective candles. They are the most commonly referenced levels in ICT daily bias work and kill zone setups.
The Close: The Most Important Price
The Close is where the candle ended. It represents the final agreement between buyers and sellers for that time period. ICT places enormous weight on where a candle closes relative to key levels.
A bullish daily candle closing above a prior swing high confirms bullish intent at the daily level. A bearish daily candle closing below a key support level confirms bearish intent. The Close, not the High or Low, is the confirmation price.
In CRT (Candle Range Theory), the Close of the reference candle is the defining level. Whether price closes above or below the midpoint of the reference candle determines the bullish or bearish CRT interpretation. The Close is always the final verdict.
Reversal Candles: Reading the Story
Reversal candles — what retail traders call doji, hammer, shooting star — are read differently in ICT. Rather than using pattern names, ICT focuses on what the Open, High, Low and Close relationship reveals about the battle between buyers and sellers.
A candle that opens near its high, makes a small move higher, then closes near its low is a bearish reversal signal — buyers tried to push higher but sellers completely overwhelmed them by the close. The wick above shows the failed push. The close near the low shows seller control.
A candle that opens near its low, dips slightly lower, then closes near its high is a bullish reversal signal — sellers tried to push lower but buyers completely overwhelmed them. The wick below shows the swept stops. The close near the high shows buyer absorption and control.
How ICT Uses OHLC in Practice
ICT traders build their daily bias by referencing the previous day close, the current day open, and where the prior trading day high and low sit relative to the expected draw on liquidity. These four data points frame the entire day.
On entry timeframes, ICT uses the OHLC of the candle that formed the Fair Value Gap to define the gap boundaries. The FVG spans from the High of candle 1 to the Low of candle 3 in a three-candle sequence. Without reading OHLC correctly, you cannot identify a valid FVG.
Order blocks are defined by the OHLC of specific candles — typically the last candle moving in the opposite direction before a large displacement move. The Open and Close of that candle form the order block boundaries that price returns to on a retracement.
Key OHLC Reference Levels in ICT
- Daily Open
- First price of the trading day — magnet for intraday price during the session.
- PDH / PDL
- Previous Day High and Low — primary liquidity levels for daily bias.
- PWH / PWL
- Previous Week High and Low — higher timeframe liquidity reference.
- Weekly Open
- Monday open price — NWOG target when gap exists from prior Friday close.
- Candle Close
- Final price of the period — confirmation level for bias and structure.
Key OHLC Patterns ICT Traders Watch For
While ICT does not use traditional candlestick pattern names, the OHLC relationships that produce those patterns are meaningful because of what the data reveals about the battle between buyers and sellers during that candle period.
The most important pattern in ICT analysis is the displacement candle — a candle with a large body covering most of its range, closing near its high (bullish) or near its low (bearish). The Open is near one extreme, the Close is near the other, and the wicks are minimal. This candle shows that one side completely overwhelmed the other with no meaningful pushback. It leaves Fair Value Gaps and confirms order flow direction.
The indecision candle — where Open and Close are close together with long wicks in both directions — shows that neither side could take control. In ICT this is often found at a liquidity level before the real move begins. Price explored both directions, took stops on both sides, and then will commit to one direction. These candles often appear just before the displacement that defines the actual move.
The rejection candle (wick with close near the opposite extreme) shows one side pushed hard then completely lost control by the close. A daily candle that opens near the low, spikes lower to sweep a liquidity level, then closes near the high is a bullish rejection candle. It shows that the downward probe was immediately absorbed and reversed. This is the visual signature of a sweep in candle form.
Understanding these patterns through the OHLC lens rather than pattern names gives you the underlying reason why they work. A hammer candle works not because it is a hammer, but because the Low was a liquidity sweep that found buyers, and the Close near the High shows they absorbed all sell pressure. The OHLC data tells you the mechanism. The pattern name is just a shortcut that hides that mechanism.
The daily OHLC sequence across consecutive sessions is also important. Three consecutive daily candles each closing higher than the previous, with each Open above the prior Close, tells a story of continuous bullish order flow with no retracement. Compare this to three green candles where each one opens below the prior close — the market is still bullish but with gaps down on open that show some overnight distribution. These sequencing patterns help you understand whether the trend is strengthening, weakening, or pausing before continuation.
Watch: Understanding OHLC Candles: What Open, High, Low and Close Tell You
Original ICT teaching on this concept from the Inner Circle Trader YouTube channel.
Frequently Asked Questions
Why does ICT focus on OHLC rather than candlestick patterns?+
ICT uses OHLC data to understand the mechanics of who won each time period — did buyers or sellers control the session? Pattern names like 'hammer' or 'doji' are shortcuts that obscure the underlying order flow story. Reading raw OHLC tells you the mechanism, not just the label.
What does the Open price represent in ICT analysis?+
The Open is the algorithmic reference price for the session. ICT teaches that price often returns to the Opening Price of the day, week, or month — it is a magnet. The relationship of the Close to the Open tells you who controlled the session.
What makes the Close the most important OHLC price?+
The Close is where all participants settled their positions at the end of the period. It reflects the final verdict of the entire session's battle. A close above the open shows buyers won. A close near the high shows complete buyer dominance. A close near the low shows complete seller dominance.
How does the High and Low tell you about stop hunts?+
If the High is significantly above both the Open and Close (a long upper wick), price swept buy stops above a level and was rejected. If the Low is significantly below both Open and Close (a long lower wick), sell stops below a level were swept. Long wicks = liquidity collection.
How does ICT use the daily OHLC in trade planning?+
Before the session, ICT traders note the prior day's OHLC to identify PDH (prior day high), PDL (prior day low), and the prior day close. These are key reference levels — BSL sits above PDH, SSL below PDL. The relationship of the current day's open to those levels helps establish the daily bias.
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