A price chart is a record of what traders have done at each price. Reading it well is less about predicting the future and more about seeing where the market has reacted before, so you can plan where a trade is wrong.
Candlesticks
Each candle summarises one time period. It records the open, high, low and close. The thick body spans the open to the close, and the thin wicks show the extremes. A long lower wick means sellers pushed the price down but buyers pushed it back up before the period ended.
Timeframes
A 1-hour chart shows one candle per hour, a daily chart one candle per day. Choose a timeframe that fits how long you want to hold trades, and check a higher timeframe first for context. A short-term dip on a 15-minute chart can be a small pullback inside a strong daily uptrend.
Trends
- Uptrend: a series of higher highs and higher lows.
- Downtrend: a series of lower highs and lower lows.
- Range: price bounces between a ceiling and a floor without making progress.
A trend is context, not a promise. Trends end, and the point of a stop-loss is to limit the damage when one does.
Support and resistance
Support is a price area where buyers have stepped in before. Resistance is an area where sellers have. Treat them as zones rather than exact lines. When price breaks through a level, the old resistance often becomes new support, and the reverse.
Moving averages and indicators
A moving average smooths recent prices into a line that helps show trend direction. The RSI measures momentum on a scale of 0 to 100, and readings above 70 or below 30 are conventionally flagged as stretched, although in a strong trend they can stay there for a long time. Indicators are calculated from price, so they lag it. Two or three you understand are worth more than ten you do not.
A simple routine
- Check the higher-timeframe trend.
- Mark two or three key zones where price has reacted before.
- Wait for price to reach a zone rather than chasing it.
- Decide where the idea is wrong (your stop) before you enter.
- Check the economic calendar for news that could jump the price.
Key takeaway
Charts show where the market has reacted before. They do not predict what happens next. Always define where you are wrong before you enter.
General information for education only, not financial advice. Trading forex and CFDs carries a high risk of loss. Read the disclaimer.