How to Read Stock Charts
A price chart is a record of what buyers and sellers actually paid. This guide covers the handful of elements you need to read one, using the live chart below to practise.
1. Candlesticks
Each candle summarises one period (one minute, one day, one week and so on) with four prices: open, high, low and close (OHLC).
- The thick body spans the open and the close. It is usually green (or hollow) when the close is above the open and red (or filled) when it is below.
- The thin wicks (shadows) show the highest and lowest prices reached during the period.
- A long upper wick means price rose but sellers pushed it back down; a long lower wick means buyers stepped in after a drop.
2. Timeframes
The same stock can look like it is rising on a daily chart and falling on a 5-minute chart. Long-term investors typically use daily or weekly candles; day traders use 1- to 15-minute candles. Check at least one higher timeframe before drawing conclusions from a short one.
3. Trend, support and resistance
- Uptrend: a series of higher highs and higher lows. Downtrend: lower highs and lower lows.
- Support is a price area where falls have repeatedly stopped; resistance is where rises have stalled. They are zones, not exact prices.
- Price scale matters: for long histories, switch to a logarithmic scale so equal percentage moves look the same size.
4. Volume
The bars at the bottom of the chart show how many shares traded in each period. Moves on unusually high volume carry more information than moves on light volume; a breakout through resistance on low volume often fails.
5. Common indicators
| Indicator | What it shows | Common reading |
|---|---|---|
| Simple / exponential moving average (SMA, EMA) | Average closing price over N periods; the EMA weights recent prices more | Price above a rising 50- or 200-day average is treated as an uptrend |
| RSI (Relative Strength Index, 14) | Speed of recent gains vs. losses on a 0–100 scale | Above 70 often called overbought, below 30 oversold |
| MACD | Difference between the 12- and 26-period EMAs, with a 9-period signal line | Crossovers of the signal line hint at momentum shifts |
| Bollinger Bands | A 20-period average with bands two standard deviations above and below | Narrowing bands signal low volatility |
| VWAP | Volume-weighted average price for the session | Intraday benchmark used by many traders |
Indicators are calculations on past prices; none of them predict the future reliably. Use them to describe what has happened, and combine them with fundamentals and risk management.
Practise on a live chart
Try it: switch the chart below to weekly candles, add a 50-period moving average and RSI from the indicators menu, and look for higher highs and higher lows.
Widget and data by TradingView. Prices may be delayed depending on the exchange; some index quotes are CFD-based feeds that can differ slightly from official index levels.
For the full-screen version go to live charts; for definitions see the glossary.
Frequently asked questions
What do green and red candles mean?
A green (or hollow) candle closed higher than it opened during that period; a red (or filled) candle closed lower than it opened.
What is the best timeframe for beginners?
Daily candles are a good starting point: they filter out intraday noise and every bar represents a full trading session.
Do technical indicators work?
They summarise past price and volume. Evidence that they predict future returns on their own is weak, so treat them as descriptive tools rather than signals to follow blindly.