How to read a trading chart

  • This topic has 4 replies, 1 voice, and was last updated 3 weeks ago by Robbo.
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  • #194104 Reply
    Lionel

      Total beginner here… can someone explain me how to read a chart? What exactly am I looking at? How do I glean information from it?

      Gold price chart

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      • #194216 Reply
        Christian Harris
        Participant

          Start here: https://www.babypips.com/learn.

          This excellent free course will give you a solid foundation for trading.

          It’s designed for forex traders in mind, but the principles of technical analysis later in the course are transferable to any asset.

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        • #194285 Reply
          Robbo

            So, your chart shows gold’s daily price movements over several months. Here are the basics:

            Each bar or “candlestick” on this chart shows the price range within a day (you’ve got the TF set to “D” in the top left).

            Green candlesticks represent days when the closing price was higher than the opening price, signaling an upward movement.

            Red candlesticks represent days when the closing price was lower than the opening price, signaling a downward movement.

            Each candlestick has four main values:

            Open: The starting price for that day.

            Close: The ending price for that day.

            High: The highest price reached during the day.

            Low: The lowest price reached during the day.

            When the chart shows consecutive green candlesticks, especially with higher highs and higher lows, it’s known as an uptrend.

            When the chart has consecutive red candlesticks, often with lower highs and lower lows, it’s known as a downtrend.

            Below the price chart are colored bars representing trading volume for each day.

            Volume shows the number of transactions that happened on each day, providing insights into the amount of market activity.

            Green volume bars indicate higher buying volume, while red bars indicate higher selling volume.

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          • #194373 Reply
            Lionel

              Thanks Robbo, that’s really helpful! So if I’m understanding correctly, an uptrend means that buyers are generally more active or confident over that period? How best do I know that a reversal is coming up or the trend is strengthening?

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              • #194458 Reply
                Robbo

                  Yeah that’s right.

                  The trickier bit is figuring out whether the trend is about to reverse or keep strengthening.

                  If you’re thinking about a reversal, watch for chart patterns like head and shoulders or double tops, divergence with indicators like RSI or MACD, and breakouts of trendlines.

                  A strengthening trend is typically confirmed by higher highs and higher lows, moving averages, positive momentum indicators, and breakouts above resistance levels.

                  They’re long to explain on here but get on Google and you’ll find some decent resources or YouTube if you want to hear someone talk through it.

                  None of them are definitive either, so word of warning there.

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