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Table of Contents

how to understand candlestick chart

how to understand candlestick chart


Candlestick charts are a very popular technical tool in the world of technical analysis, particularly when comes to trading. These charts provide futuristic insights into price movements, making them an essential skill for anyone looking to start trading into the stock market. In this guide, we’ll break down candlestick charts into bite-sized pieces to ensure that you know how to understand a candlestick chart such that its every aspect is crystal clear for beginners. You won’t need to go for a stock market courses online free with certificate or a stock market free webinar after this blog!

What are candlestick charts?

In a layman’s term, candlestick charts are a visual representation of price movements in the financial markets with four values- OHLC i.e., Open, High, Low and Close. Each candlestick represents price movement for that specific time frame. These are widely used to analyze price patterns and trends. The name “candlestick” comes from the shape of the data point, which looks like a candle with a wick on top and sometimes a tail at the bottom. To understand more about candlestick, refer to this blog post! So, how to understand a candlestick chart?

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The key to understand candlestick charts are basic candlestick patterns. Yes, until you master the major candlestick pattern, you cannot determine what the next potential market moves are. As a beginner, it’s important to familiarize yourself with some of the basic patterns which are explained in this blog!

One must not only study the patterns but understand in which market they would work. One should always focus on using the bullish pattern for a bullish opinion and not the other way, even if the SL hits.

So, after understanding what candlestick pattern is, beginners often get stuck in which timeframe, basic candlestick charts need to be studied?

Candlestick charts can be viewed in various timeframes, such as 15 mins, 1 day, 1 week, or even 1 month. Each timeframe provides different insights. Shorter timeframes (like in minutes) are useful for day traders, while longer timeframes (like daily) are better for swing and even longer timeframes (like weekly and monthly) are best for positional traders.

Although basic candlestick charts are a great supportive strategy to support and resistance as we often see these patterns emerging at support and resistance levels. These levels are areas where price tends to stall or reverse. Taking trades at these levels with the help of support and resistance can prove to be a game-changer strategy while trading and making decisions.

To get started with candlestick analysis, you’ll need access to candlestick charts first. Fortunately, there are many online charting platforms and tools available for free and small fees. Some popular ones include TradingView,, etc.

It is important to remember that becoming an expert at reading candlestick charts takes a lot of practice. One can start with a demo account or do paper trades or even simply try to identify the patterns to hone their skills without risking real money. Different strategies could also be used alongside basic candlestick charts to develop a good trading framework.

Finally, a word of caution:

Don’t rush into trading solely based on candlestick pattern. Also, don’t try to implement it on penny stocks first. Try finding out the best penny stocks first and then use the strategy on monthly timeframe to unlock the power of compounding. Overtrading, revenge trading and ignoring risk management can lead to substantial losses or even a complete capital wipeout. One must always use candlestick analysis as part of a broader strategy.

In conclusion

candlestick charts are a powerful tool for traders. By mastering the basics, understanding patterns, and practicing regularly, you can harness the potential of this strategy to make more informed decisions in the financial markets. To learn how you can develop a trading strategy, you can go for the best stock market courses in Delhi or look for stock market institute near me. Happy charting!

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