How to read candlestick charts: a beginner's guide
Also in: Nederlands Français Español Português Deutsch Türkçe Bahasa Indonesia
Each candle shows four prices for one period: open, high, low and close. A green candle closed higher than it opened, a red one lower. Volume shows how much was traded. Learn the shapes on practice charts before you look at real money.
One candle, four prices
- Body: the part between the open and the close.
- Wicks: the thin lines above and below, showing the highest and lowest price.
- Colour: green (or hollow) when it closed higher, red when it closed lower.
Volume
The bars under the chart show how much was traded. A big move on tiny volume is easy to push and easy to reverse. A move with strong volume means more people took part.
Moving average
A moving average is the average close over the last few periods, drawn as a smooth line. It shows the general direction and filters out some noise. It always lags behind the price.
RSI
RSI is a number from 0 to 100 that compares recent gains with recent losses. Above 70 is often called overbought, under 30 oversold. It is a description of the past, not a prediction.
The pump-and-dump shape
A sudden vertical rise on thin volume, followed by a long red slide, is the classic pump-and-dump. Late buyers pay for the early sellers' profits.
Practise without risk
Chart School has seven short lessons and a "guess the next candle" game on made-up practice charts, so nothing on the page is a signal. Then test yourself against an AI in the Kronos Lab.