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When drawing candlesticks, our system uses one rule for determining whether to draw them with a red or black color and a different rule for determining whether to draw them filled or hollow (i.e., "white").
When it is deciding which color to use - red or black - the system looks at the closing value of the current candle and compares it to the closing value of the previous candle. If the current candle's close is higher than the previous close, we use black. If it is lower, we use red.
When it is deciding whether to draw a filled candle or a hollow candle, the system looks at the opening value of the current candle and compares it to the closing value of the current candle. If the current candle's close is higher than the open, we draw a hollow candle. If it is lower, we draw a filled candle.
Most of the time, those rules result in hollow candles being drawn in black and filled candles being drawn in red HOWEVER that is not always the case.
If a stock gaps way up on the open - so the open is much higher than the previous close - but then prices fall during the day, it is possible for a filled black candle to appear. That is what happened to COP on January 6th for example. The stock opened at 56.53, well above the previous day's close of 55.47. It then finished the day at 55.68 which was higher that the previous day's close (thus we use black) but lower than the open (thus we draw a filled candle).
On Dec. 12th, the opposite situation occurred and we ended up with a hollow red candle on the chart.
Philosophically, these "counter-intuitive" candles occur when a stock gaps up (or down) on the open and then moves lower (or higher) during the day - so the extreme optimism (pessimism) at the start of the day fades quickly. That is a good sign that the market's general opinion on the stock has changed and prices will probably reverse soon. The COP chart above has two short term reversals that were heralded by filled black candles (blue arrows) and one that corresponds to a hollow red candle (green arrow).
