Reading Price Charts

A candlestick represents price action over a specific time period. It has four data points: Open (where price started), Close (where it ended), High (the highest point reached), and Low (the lowest point reached).

A green (bullish) candle means price closed higher than it opened. A red (bearish) candle means price closed lower. The "wicks" or "shadows" extending above and below the body show the high and low.

Candlestick patterns — like the Doji, Hammer, Engulfing, or Morning Star — are visual representations of the battle between buyers and sellers. Learning to read them gives you context for what happened during that period.

Every candlestick represents a time period: a 1-minute candle shows 1 minute of price action; a daily candle shows a full day. Common timeframes are 1m, 5m, 15m, 1h, 4h, Daily, and Weekly.

Higher timeframes (4h, Daily, Weekly) show the bigger picture — major trends and key levels. Lower timeframes (1m, 5m, 15m) show short-term noise and entry precision.

A common mistake is trading on a low timeframe without checking the higher timeframe context. Always know the trend on the timeframe above the one you are trading.

Support is a price level where buying pressure has historically been strong enough to stop or reverse a decline. Resistance is a level where selling pressure has historically been strong enough to stop or reverse a rally.

These levels exist because of human psychology — traders remember where price reversed before and act accordingly. The more times a level has been tested, the more significant it becomes.

When a support level breaks, it often becomes resistance (and vice versa). This "flip" concept is one of the most reliable patterns in technical analysis.

An uptrend is defined by higher highs and higher lows. A downtrend is defined by lower highs and lower lows. A range (sideways market) is defined by price bouncing between a horizontal support and resistance.

The simplest trend-following rule: trade in the direction of the trend on your chosen timeframe. Buying in an uptrend and selling in a downtrend puts probability on your side.

Trend lines connect a series of higher lows (in an uptrend) or lower highs (in a downtrend). A break of a trend line is often the first signal that the trend may be changing.

Volume shows how many units of an asset were traded during a candle. High volume confirms price moves — a breakout on high volume is more reliable than one on low volume.

Divergence between price and volume is a warning sign. If price is making new highs but volume is declining, the move may lack conviction and a reversal could be near.

Volume is one of the most underused tools by beginners. Always check whether volume supports the price action you are observing.

Chart patterns are recurring formations that have statistical tendencies. Common continuation patterns include flags, pennants, and triangles. Common reversal patterns include head and shoulders, double tops, and double bottoms.

No pattern works 100% of the time. Patterns are probabilistic — they tilt the odds in your favour, not guarantee an outcome. Always use a stop-loss regardless of how "perfect" a pattern looks.

The most important skill is not memorising every pattern, but understanding the supply/demand logic behind each one. Why does a head and shoulders tend to reverse? Because it shows a failed attempt to make a new high, signalling that buyers are exhausted.