How to Read Stock Charts: Beginner Guide
Learn to read candlestick charts, identify trends, support/resistance levels, and basic patterns.
Candlestick Basics
Each candlestick shows four prices: Open, High, Low, Close (OHLC). Green/white candle = price went up (closed higher than opened). Red/black candle = price went down.
Timeframes
Charts can show different timeframes. A daily chart: each candle = 1 day. A 1-hour chart: each candle = 1 hour. Day traders use 5-minute to 1-hour. Swing traders use 4-hour to daily. Investors use weekly/monthly.
Trends
Uptrend: Series of higher highs and higher lows. The price is generally going up.
Downtrend: Series of lower highs and lower lows. Price going down.
Sideways: Price bouncing between two levels. No clear direction.
Support and Resistance
Support: A price level where buying pressure prevents further decline. Think of it as a floor.
Resistance: A price level where selling pressure prevents further advance. Think of it as a ceiling.
When price breaks through resistance, it often becomes new support (and vice versa).
Volume
Volume bars at the bottom show how many shares were traded. High volume on a price move = strong conviction. Low volume on a price move = weak, likely to reverse.