Learn the language of a chart.
Candlesticks, timeframes, and market structure: the building blocks of reading price.
A price chart puts market activity into a visual form. A candlestick summarizes the open, high, low, and close for its period. Learning what those four values mean gives you a foundation for describing a chart before interpreting it.
A few things to understand first
Start with the candle
The body connects the opening and closing prices. The wicks extend to the high and low. Candle colors depend on your chart settings, so check the legend instead of assuming that a particular color means an increase.
Keep the timeframe in view
On a time-based chart, each candle covers a set interval. A five-minute candle and a daily candle summarize different amounts of activity. A small move on one view can sit inside a larger pattern on another.
Separate description from prediction
A chart records price information; interpreting a pattern adds judgment. Begin by naming what you can see, such as the period’s range and closing price, before drawing conclusions about what might happen next.
Source: CME Group: Chart types and candlesticks.
Build the foundation with our guide to reading a chart. Examples are educational; they do not establish what a market will do next.
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