Reading Charts

Charts are the foundation of technical analysis. This tutorial teaches you how to read and interpret price charts, understand candlestick patterns, and use different timeframes for effective trading analysis.

Why Charts Matter

Charts visualise price movement over time, helping you:

• 📈 Identify trends and market direction
• 🎯 Find support and resistance levels
• 🔮 Spot potential reversals and continuations
• ⏰ Time your entries and exits
• 📊 Confirm trading signals

Chart Types

Candlestick Charts (Recommended)

The most informative chart type, showing open, high, low, and close (OHLC) data.

Anatomy of a Candlestick:

1↑ Upper Wick (High)
2    │
3┌───┴───┐
4│       │  Body (Open/Close range)
5└───┬───┘
6    │
7    ↓ Lower Wick (Low)
8
9Green/White: Close > Open (Bullish)
10Red/Black: Close < Open (Bearish)

Line Charts

Connects closing prices with a continuous line.

Best For:

• Quick trend identification
• Long-term analysis
• Clean, simple visualisation

Limitations:

• No intraday information
• Hides volatility

Bar Charts (OHLC)

Traditional chart showing same data as candlesticks in a different format.

1High ─┬─
2            │
3Open ──────├
4            │
5Close ─────┤
6            │
7       Low ─┴─

Area Charts

Line chart with filled area below, emphasising overall trend.

Heikin-Ashi Charts

Modified candlesticks that smooth price action:

HA Close = (Open + High + Low + Close) / 4
HA Open = (Previous HA Open + Previous HA Close) / 2
HA High = Max(High, HA Open, HA Close)
HA Low = Min(Low, HA Open, HA Close)

Best For:

• Trend identification
• Filtering noise
• Staying in trades longer

Timeframes Explained

Timeframes determine how much price data each candlestick represents.

Available Timeframes

Changing Timeframes

1. Click the timeframe selector in the chart toolbar
2. Select your desired timeframe
3. Or use keyboard shortcuts:
   • 1 = 1 minute
   • 5 = 5 minutes
   • H = 1 hour
   • D = 1 day

Multi-Timeframe Analysis

Analyse multiple timeframes for better decisions:

Top-Down Approach:

1. Higher timeframe (1D/4H): Identify trend direction
2. Middle timeframe (1H/15m): Find trade setups
3. Lower timeframe (5m/1m): Fine-tune entry

Example:

Daily: Uptrend (higher highs, higher lows)
4H: Pullback to support
1H: Bullish reversal pattern forming
Entry: Long with stop below support

Essential Candlestick Patterns

Single Candle Patterns

Doji

A candle where open and close are nearly equal.

│
    ┼    (Cross/Plus shape)
    │

Meaning: Indecision between buyers and sellers Action: Wait for confirmation; potential reversal

Hammer / Hanging Man

Long lower wick, small body at top.

┌┐
    ││
    ││
    │

Hammer (at support): Bullish reversal Hanging Man (at resistance): Bearish reversal

Inverted Hammer / Shooting Star

Long upper wick, small body at bottom.

│
    ││
    ││
    └┘

Inverted Hammer (at support): Bullish reversal signal Shooting Star (at resistance): Bearish reversal signal

Marubozu

Full body with no wicks.

Green: ████  (Strong bullish)
Red:   ████  (Strong bearish)

Meaning: Strong conviction in direction Action: Continuation likely

Two-Candle Patterns

Bullish Engulfing

Green candle completely engulfs previous red candle.

█       │
   █   →   █
   █       █
           █

Meaning: Buyers overwhelmed sellers Location: At support = strong bullish signal

Bearish Engulfing

Red candle completely engulfs previous green candle.

█
   █       █
   █   →   █
   █       │

Meaning: Sellers overwhelmed buyers Location: At resistance = strong bearish signal

Piercing Line / Dark Cloud Cover

Piercing Line: Green candle opens below prior red close, closes above midpoint Dark Cloud Cover: Red candle opens above prior green close, closes below midpoint

Three-Candle Patterns

Morning Star (Bullish)

Three-candle reversal at bottom:

█       █
    █   ▪   █
    █       █
            █

1. Long red candle (bearish pressure)
2. Small body (indecision)
3. Long green candle (bullish reversal)

Evening Star (Bearish)

Three-candle reversal at top:

█
    █       █
    █   ▪   █
    █

1. Long green candle (bullish pressure)
2. Small body (indecision)
3. Long red candle (bearish reversal)

Three White Soldiers

Three consecutive bullish candles with higher closes.

█
        █   █
    █   █   █
    █   █
    █

Meaning: Strong bullish momentum Action: Look for continuation

Three Black Crows

Three consecutive bearish candles with lower closes.

█
    █   █
    █   █   █
        █   █
            █

Meaning: Strong bearish momentum Action: Look for continuation

Chart Patterns

Reversal Patterns

Double Top

Price tests resistance twice and fails.

╭─╮   ╭─╮
   ╱   ╲ ╱   ╲
  ╱     ╳     ╲  ← Neckline break = bearish
 ╱             ╲

Trade: Sell on break below neckline Target: Distance from top to neckline

Double Bottom

Price tests support twice and bounces.

╲             ╱
  ╲     ╳     ╱  ← Neckline break = bullish
   ╲   ╱ ╲   ╱
    ╰─╯   ╰─╯

Trade: Buy on break above neckline Target: Distance from bottom to neckline

Head and Shoulders

Three-peak formation signalling trend reversal.

╭─╮
    ╭─╮    ╱   ╲   ╭─╮
   ╱   ╲  ╱     ╲ ╱   ╲
──╱─────╲╱───────╳─────╲── Neckline

Trade: Sell on neckline break Target: Distance from head to neckline

Inverse Head and Shoulders

Mirror of H&S at market bottoms.

Trade: Buy on neckline break Target: Distance from head to neckline

Continuation Patterns

Flag / Pennant

Brief consolidation before trend continuation.

Bull Flag:

╱───╲
       ╱     ╲ (tight channel)
    │╱       ╲
    │         ↘
   ╱│

Trade: Buy on breakout above flag Target: Height of the pole (initial move)

Triangle Patterns

Ascending Triangle: Flat top, rising bottom (bullish) Descending Triangle: Flat bottom, falling top (bearish) Symmetrical Triangle: Converging lines (breakout either direction)

Ascending:    Descending:    Symmetrical:
════════      ╲              ╲
   ╱             ╲              ╳
  ╱               ╲           ╱
 ╱                 ════════  ╱

Rectangle / Range

Price bounces between parallel support and resistance.

═══════════════════  Resistance
   ↑     ↑     ↑
   ↓     ↓     ↓
═══════════════════  Support

Trade: Breakout direction with volume confirmation

Support and Resistance

What Is Support?

A price level where buying pressure overcomes selling pressure.

• Price tends to bounce up from support
• If broken, support becomes resistance
• More tests = stronger level

What Is Resistance?

A price level where selling pressure overcomes buying pressure.

• Price tends to bounce down from resistance
• If broken, resistance becomes support
• More tests = stronger level

Identifying Support/Resistance

1. Historical Price Levels: Where price reversed before
2. Round Numbers: 1.1000, 1.2000 (psychological)
3. Moving Averages: 50 MA, 200 MA as dynamic levels
4. Fibonacci Retracements: 38.2%, 50%, 61.8%
5. Trendlines: Diagonal support/resistance

Drawing Support/Resistance

1. Enable drawing tools (pencil icon)
2. Select Horizontal Line
3. Click on the price level
4. Adjust position by dragging
5. Double-click to edit properties

Trend Analysis

Identifying Trends

Uptrend:

• Higher highs (HH)
• Higher lows (HL)

1HH
2         HH  ╱
3        ╱   ╱
4   HH  ╱   ╱
5  ╱   ╱   ╱
6 HL  HL  HL

Downtrend:

• Lower highs (LH)
• Lower lows (LL)

LH  LH  LH
  ╲   ╲   ╲
   ╲   ╲   LL
    ╲   LL
     LL

Sideways/Range:

• Equal highs and lows
• Consolidation

Drawing Trendlines

1. Select Trendline from drawing tools
2. Connect at least 2 swing points:
   • Uptrend: Connect swing lows
   • Downtrend: Connect swing highs
3. Extend line forward for projection

Trendline Rules:

• Minimum 2 touches (3+ is stronger)
• Steeper angles are less sustainable
• Broken trendline = potential trend change

Reading Price Action

Volume Analysis

Volume confirms price movements:

Momentum

Look at the "character" of candles:

• Strong momentum: Large bodies, small wicks
• Weakening momentum: Smaller bodies, longer wicks
• Exhaustion: Doji, spinning tops at extremes

Confluence

Multiple factors aligning increase probability:

1Confluence Example:
2✓ Daily uptrend
3✓ 4H pullback to support
4✓ Support = 50% Fibonacci
5✓ Bullish engulfing pattern
6✓ RSI oversold bounce
7= High probability long setup

Chart Navigation

Zoom and Pan

Crosshair Mode

1. Press C or click crosshair icon
2. Hover over chart to see exact price/time
3. Click to place crosshair at point
4. Useful for measuring moves

Ruler Tool

Measure price distance and percentage:

1. Select Ruler from drawing tools
2. Click starting point
3. Drag to ending point
4. See: price change, pip change, percentage

Saving Chart Layouts

Save Current Layout

1. Click Layout menu (top right)
2. Select Save Layout
3. Name your layout
4. Click Save

Load Layout

1. Click Layout menu
2. Select saved layout
3. Chart restores all settings

Layout Includes

• Timeframe
• Indicators
• Drawing tools
• Chart type
• Colour scheme

Chart Analysis Checklist

Before trading, answer these questions:

• What is the overall trend (higher timeframe)?
• Where are key support/resistance levels?
• Are there any chart patterns forming?
• What are candlesticks saying about momentum?
• Is there confluence of factors?
• What invalidates this analysis?

Common Mistakes

1. Seeing Patterns Everywhere

Problem: Forcing patterns that don't exist Solution: Confirm patterns with volume and context

2. Ignoring Higher Timeframes

Problem: Trading against the trend Solution: Always check 1D/4H before entering

3. Analysis Paralysis

Problem: Too many indicators, conflicting signals Solution: Keep it simple; price action first

4. Ignoring Context

Problem: Pattern means nothing without context Solution: Consider where in the trend the pattern appears

Next Steps

Continue your technical analysis journey:

• Using Indicators - Add confirmation tools
• Setting Stop Losses - Place stops using charts
• Managing Portfolio - Apply analysis to positions
• Technical Analysis Guide - Deep dive

Need Help?

• FAQ: Technical Questions
• Feature Guide: Trading Interface
• Live Support: Click the chat widget