Candlesticks — the building block
Most charts use candlesticks. Each candle shows four prices for a period: the open, high, low and close. A green (or hollow) candle means the price closed higher than it opened; red (or filled) means it closed lower. The “wicks” show the high and low.
Trend — the big picture
The trend is the overall direction. An uptrend makes higher highs and higher lows; a downtrend makes lower highs and lower lows; a sideways market moves in a range. Identifying the trend first keeps you on the right side of the market.
Support and resistance
Support is a level where falling prices tend to pause; resistance is where rising prices tend to stall. A decisive move beyond these levels — a breakout — can signal a new move, especially on higher volume.
A few common indicators
Indicators summarise price action into signals.
- Moving averages — smooth the price to show the trend (e.g. 50-day, 200-day).
- RSI — flags overbought (>70) or oversold (<30) conditions.
- Volume — confirms the strength behind a move.
A word of caution
Charts show probabilities, not certainties. Technical analysis works best alongside risk management like a stop-loss, and is not a guarantee of future prices. Never risk more than you can afford to lose.
Frequently asked questions
What is the best chart type for beginners?
Candlestick charts are the most widely used because each candle clearly shows the open, high, low and close for a period.
What do green and red candles mean?
A green candle means the price closed higher than it opened (buying pressure); a red candle means it closed lower (selling pressure).
What are support and resistance?
Support is a price level where declines tend to pause; resistance is where advances tend to stall. Breaking through either can signal a new move.
Can chart reading predict prices?
No. Technical analysis estimates probabilities based on past price and volume — it cannot guarantee future prices. Always use risk management.