How to read charts
Basic level — chart types and trend definition
Chart types
There are three main chart types: • Line — simple, shows only the closing price. Very little information. • Bar — more information, but hard to read visually. • Japanese candlesticks — the most informative type. Used by all professionals.
What the chart shows
A chart is a history of price. X-axis = time, Y-axis = price. Each point or candle = price for a specific period. Learning to read a chart is like learning to read a book. First letters, then words, then whole sentences.
Trend — the main concept
A trend is the main direction of price movement. Defining the trend is the first step of any analysis.
Three types of trend
Uptrend
The price makes new highs. Each peak higher than the previous one.
Downtrend
The price makes new lows. Each bottom lower than the previous one.
Flat (Range)
The price moves in a horizontal channel with no clear direction.
How to identify a trend in 10 seconds: look at the chart and ask yourself — is the right edge higher or lower than the left? Higher = uptrend. Lower = downtrend. About the same = flat.
Identify the trend
1/5Test yourself
3 questions. You need 3+ correct to pass the lesson.