How to Read Hollow Candles Correctly?

If you are familiar with traditional red and green candlestick charts, hollow candles may look slightly confusing at first. Some candles are empty, others are filled, and you may even see a red candle that rises from its opening price or a green candle that falls.

This happens because hollow candlestick charts can display two price relationships at the same time. The fill of the candle shows how the closing price compares with its opening price, while the colour can show how the latest close compares with the previous candle’s close. This gives traders another way to study price action without changing the underlying open, high, low and close data.

What Are Hollow Candles?

Hollow candles are a variation of Japanese candlesticks that use both colour and body fill to represent price movement.

Like regular candlesticks, each candle contains four main prices:

• Open: Price at the beginning of the period
• High: Highest price reached
• Low: Lowest price reached
• Close: Price at the end of the period

The body represents the distance between the opening and closing prices, while the upper and lower wicks show the highest and lowest prices reached during that period.

What makes hollow candlesticks different is how this information is displayed.

Under the commonly used TradingView convention:

Hollow or filled tells you about the current open and close.

Green or red tells you about the current close and previous close.

It is important to check your chart settings because colours can be customised and conventions may vary between platforms.

How to Read Hollow Candles

The easiest way to read hollow candles is to look at the body first.

A hollow body means the closing price is higher than the opening price.

A filled body means the closing price is lower than the opening price.

Then look at the colour. On TradingView’s Hollow Candles chart:

• Green means the current close is above the previous close.
• Red means the current close is below the previous close.

Combining these two rules creates four possible types of hollow candlesticks.

Candle type	Current close vs open	Current close vs previous close
Green hollow	Higher	Higher
Green filled	Lower	Higher
Red hollow	Higher	Lower
Red filled	Lower	Lower

Green Hollow Candle

A green hollow candle means the price closed above both its current opening price and the previous candle’s close.

For example:

Previous close: $100
Current open: $101
Current close: $105

The price rose during the current period and also finished above the previous closing level.

Green Filled Candle

A green filled candle can initially look contradictory.

Imagine:

Previous close: $100
Current open: $105
Current close: $102

The price fell from $105 to $102 during the current period, so the body is filled. However, it still finished above the previous $100 close, so the candle is green.

This shows why looking only at candle colour can miss part of the story.

Red Hollow Candle

A red hollow candle is another combination that often confuses beginners.

For example:

Previous close: $100
Current open: $95
Current close: $98

The price increased from $95 to $98 during the current period, making the body hollow. However, it remained below the previous $100 close, so the candle appears red.

This shows intraperiod buying strength, but the market has not yet recovered above its previous closing level.

Red Filled Candle

A red filled candle occurs when the current close is below both the open and the previous close.

For example:

Previous close: $100
Current open: $99
Current close: $95

Selling pressure dominated the period and the market finished below its previous closing level.

Hollow Candles vs Regular Candlesticks

Both chart types use the same basic OHLC data, but they present it differently.

Regular candlesticks usually focus primarily on the relationship between the current open and close. A green candle commonly means the price closed above its opening level, while red means it closed below.

Hollow candles add another visual comparison by showing the current close relative to the previous close.

This does not mean they contain additional market data. Rather, the same price information is encoded differently, which can make changes between consecutive periods easier to identify.

Regular candlesticks may therefore feel simpler, while hollow candlesticks can provide additional visual context for traders who closely follow closing-price behaviour.

What Can Hollow Candles Tell Traders?

One individual candle should not automatically be treated as a buy or sell signal. The surrounding candles often provide more useful information.

For example, a sequence of green hollow candles may occur as buying pressure continues through an upward move. If those candles begin changing into filled bodies, it can indicate that price behaviour within each period is changing.

Body size also matters. A large candle shows a wider difference between the open and close, while a small body indicates that the two prices finished relatively close together.

Wicks add another layer of context. A long upper wick can show that prices traded significantly higher before retreating, while a long lower wick shows that prices fell before recovering.

As with other candlestick techniques, these features are generally more useful when interpreted alongside the wider market structure rather than in isolation.

Hollow Candles vs Heikin Ashi

Hollow candlesticks should not be confused with Heikin Ashi candles.

The key difference is how their prices are calculated.

Hollow Candles	Heikin Ashi
Display conventional OHLC data	Use calculated average values
Focus on price relationships	Focus on smoothing price movement
Show actual period prices	May differ from actual market prices
Useful for studying price action	Often used to visualise trends

TradingView explains that Heikin Ashi uses average prices calculated partly from previous candle values. This produces a smoother chart but means the displayed candle prices are not the same as standard market OHLC values.

Hollow candles, by contrast, keep conventional candlestick price data and change how those relationships are visually presented.

How to Use Hollow Candles in Trading

Rather than using a single candle as a trading signal, traders can combine hollow candles with other forms of technical analysis.

Trend analysis: Look at sequences of candles rather than one candle alone. Changes between hollow and filled bodies may help highlight shifts in short-term behaviour.

Support and resistance: Watch how candles behave when price reaches an established technical level. Long wicks, changing body types or repeated failed moves can provide additional context.

Volume: Volume can help assess how much market participation accompanies a price movement.

Technical indicators: Moving averages, RSI or ATR can be used alongside candlestick analysis to provide trend, momentum or volatility context.

The aim is not to find one candle that predicts the next move. Instead, the candles can form part of a wider analysis of market conditions.

Limitations of Hollow Candles

Although hollow candlesticks can make certain price relationships easier to recognise, they have limitations.

They do not show exactly how every price movement occurred within a candle. One candle simply summarises the open, high, low and close for its selected period.

They also do not automatically show trading volume or explain why a market moved.

Most importantly, the appearance of one candle does not confirm what will happen next. TradingView similarly recommends considering broader context rather than relying solely on candlestick or automated pattern signals.

For these reasons, hollow candles are best viewed as a way of presenting price data, rather than a standalone trading strategy.

Understanding Hollow Candles at a Glance

The simplest way to remember hollow candles is:

Hollow or filled = current close compared with current open.

Green or red = current close compared with the previous close, depending on your platform settings.

Once you understand these two relationships, unusual combinations such as red hollow or green filled candles become much easier to interpret.

Hollow candlesticks can help traders see how price behaves both within the current period and relative to the previous close. Combined with trend analysis, support and resistance, volume and other technical tools, they can provide another useful perspective on market price action.

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