Learn to Read the Candlestick Chart

Open a trading chart and you will see "candlesticks" filling the screen. This chapter teaches you to read them — the most basic skill of chart reading.

Why candlesticks

There are several chart types, but the candlestick is the most popular, because a single candle carries 4 pieces of information and can tell the story of that period.

One candlestick = 4 data points (OHLC)

Each candle represents one period of time (e.g. 1 hour) and shows: - Open — the opening price (when the period began) - High — the highest price in that period - Low — the lowest price in that period - Close — the closing price (when the period ended)

The structure of a candle: - Body — the thick part in the middle = the distance between Open and Close - Wick / Shadow — the thin lines top and bottom = how far the price reached to the High and Low

The colour of the candle: - A green candle (bullish) — Close higher than Open → the price rose that period, buyers won - A red candle (bearish) — Close lower than Open → the price fell that period, sellers won

The candle tells the story of a "battle": - a long body = the winning side was in complete control - a short body + long wicks = a close, hesitant fight - a long lower wick = the price went down but buyers pushed it back up (buyers are gaining strength)

Timeframe — the time window of each candle

You choose how long 1 candle represents: M1 (1 minute), M5, M15, H1 (1 hour), H4, D1 (1 day).

- a large timeframe (H4, D1) — you see the big picture, the trend is clear, signals are more reliable - a small timeframe (M1, M5) — you see detail, but there is a lot of "noise" and it fakes you out easily

Beginner: start by looking at H1 and H4 — do not get buried in M1 yet.

Trend — the market's direction

Looking at the big picture, the price has 3 states: - Uptrend — the price makes higher tops + higher bottoms (Higher High, Higher Low) - Downtrend — the price makes lower tops + lower bottoms (Lower High, Lower Low) - Sideways — the price swings in a range, going nowhere

A golden rule for beginners: trade with the trend — in an uptrend look for Buys, in a downtrend look for Sells · do not fight the trend yet.

Support & Resistance — get to know them first

- Support — a price level where buyers have stepped in and the price bounced up — like a "floor" - Resistance — a level where sellers have pressed the price down — like a "ceiling"

The price often reacts at these levels · the ebook "Reading the Naked Chart — Price Action" digs into this — for now, just know they exist.

> One candlestick = Open/High/Low/Close + the colour tells you who won · look at large timeframes first · find the trend, then trade with it

Next chapter — once you see the chart, how do you place an order