Reading a chart: candlesticks, timeframes and trend
- What a candlestick shows
- How timeframes change the picture
- How to recognise an uptrend, a downtrend and a range
One candle, four prices
Each candlestick shows one period (one minute, one hour, one day): the open, high, low and close. The thick part is the body (open to close); the thin lines are wicks (the extremes). A candle that closes higher than it opened is usually green or white; lower, red or black.
- A long body shows strong buying or selling.
- A long wick shows price was pushed there and rejected.
- A small body with wicks on both sides shows indecision.
Timeframes
The same market looks different on a 5-minute chart (M5) and a daily chart (D1). Higher timeframes show the main direction; lower ones show detail and timing. A move that looks huge on M5 may be a tiny pullback on D1.
A common habit: decide direction on a higher timeframe (H4 or D1) and time entries on a lower one (H1 or M15). Lesson "Multi-timeframe analysis" goes deeper.
Trend: the most important thing on the chart
- Uptrend: higher highs and higher lows.
- Downtrend: lower highs and lower lows.
- Range: price moving sideways between a ceiling and a floor.
Most beginner losses come from fighting the trend: selling in a strong uptrend because the price "looks too high". It can always go higher.
Keep the chart clean
Price itself carries most of the information. Start with candles and one or two tools (levels, a moving average). Ten indicators don't make a clearer picture, just a busier one.
- Deciding direction on a 1-minute chart.
- Calling every pullback a reversal.
- Filling the chart with indicators before learning to read price.
Check yourself
- A candle shows open, high, low and close; wicks show rejection.
- Use higher timeframes for direction, lower ones for timing.
- Trend = higher highs and lows (up) or lower highs and lows (down).