A red candle commonly shows that an asset’s closing price was below its opening price for a chosen chart interval. This convention is frequent on crypto charts, but colors are configurable and some markets use red for rising prices. The definition therefore depends on the chart’s legend, not color alone.
Body and price range
With red used for a decline, a candle opening at 105 and closing at 100 has a red body between those prices. A high of 108 and low of 98 appear as wicks beyond the body. The candle summarizes these four prices without revealing every intermediate trade or whether the high occurred before the low.
Interpreting the decline
A red candle need not mean a loss relative to the previous close. If the preceding candle closed at 95, a close at 100 is higher despite the current candle being red. Likewise, one red hourly candle may occur within a rising daily trend.
An unfinished candle can change color as trading continues. A completed red candle records a past opening-to-closing decline; it does not establish the next move, the reason for selling or the profitability of opening a short position.