Charts & Candlesticks

Reading Stock Charts

Charts visualize price movements over time, helping you identify patterns and make trading decisions. Candlestick charts are the most popular among traders.

Candlestick Anatomy

Each candlestick shows four prices for a time period: Open, High, Low, Close (OHLC).

Body: The thick part between open and close
Wicks/Shadows: Lines showing the high and low
Green/White: Close higher than open (bullish)
Red/Black: Close lower than open (bearish)

Key Candlestick Patterns

Doji

Open and close nearly equal. Indicates indecision, potential reversal.

Hammer

Small body at top, long lower wick. Bullish reversal signal after downtrend.

Engulfing

Large candle "engulfs" previous small candle. Strong reversal signal.

Morning/Evening Star

Three-candle reversal pattern. Morning = bullish, Evening = bearish.

Timeframes

Different timeframes serve different purposes:

1-5 minute: Day trading, scalping
15-60 minute: Intraday analysis
Daily: Swing trading, position trading
Weekly/Monthly: Long-term investing, trend identification

💡 Multi-Timeframe Analysis

Use higher timeframes to identify the trend, then lower timeframes to find entries. If daily is bullish, look for long entries on the 1-hour chart.

📋 Key Takeaways

Review this lesson's material before moving on
Practice the concepts on a demo account
Take notes on what you've learned