Reading a Chart: The Absolute Basics

A price chart is just a picture of what price did over time, but it's the trader's primary lens. The most common format is the candlestick chart, and once you can read a single candle you can read the whole story the market is telling.

Anatomy of a candle

Each candle covers a slice of time — a minute, an hour, a day, depending on your chosen timeframe. It shows four prices: where that period opened, where it closed, and the highest and lowest points in between. The body is the range between open and close; the thin wicks show the extremes price reached but didn't hold.

• A candle that closes higher than it opened shows buyers were in control for that period.
• A candle that closes lower shows sellers won the period.
• Long wicks show price was pushed to an extreme and then rejected — a tug-of-war left on the chart.

Structure before patterns

Before hunting for named patterns, learn to see basic structure: is price making higher highs and higher lows (an uptrend), lower highs and lower lows (a downtrend), or bouncing between two levels (a range)? That single read — trend or range — informs almost every decision that follows. Everything fancier is built on top of it.