How To Read A Price Chart – The Basics

 

Before diving into technical indicators and patterns, it’s important to understand the price charts themselves — how they’re structured, what they show, and how to read them.

 

Most stock charts show how a stock’s price has moved over time — and are usually viewed over different timeframes, such as:

 

• 1 day

• 1 week

• 3 months

• 1 year

• 5 years
  You can zoom in for short-term trading or zoom out for long-term trends.

 

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1. Line Chart – The Simplest View

 

A line chart connects one price point per period — usually the closing price — into a continuous line.

 

Line charts are great for:

• A quick overview of general trend (upward/downward/sideways)

• Long-term investors who don’t need to see short-term movements

 

🔹 Easy to read
🔹 Clean and uncluttered
🔹 Not great for detailed short-term analysis

 

2. Candlestick Chart – A Detailed Look at Price Action

 

Candlestick charts are the most popular chart type used in technical analysis.
Each “candle” represents price action for a specific period (e.g. 1 day, 1 hour, etc.).

 

Each candlestick shows four key prices:

• Open: Price at the start of the period

• Close: Price at the end of the period

• High: The highest price during the period

• Low: The lowest price during the period

 

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Candlestick Anatomy

 

• Body: The thick middle part (shows open to close)

• Wicks (or Shadows): Thin lines above and below (show highs and lows)