Reading Candlestick Charts

Each candlestick represents a single time period — one hour on the 1-hour chart, one full day on the daily chart. Every candle packs in four prices, called OHLC: Open, High, Low, and Close.

A green (bullish) candle means the price closed higher than it opened — buyers won that period. A red (bearish) candle means it closed lower — sellers dominated. The thin lines extending above and below the body are called wicks (or shadows) and show the full range the price reached.

Long wicks mean price was pushed far in one direction but rejected — buyers or sellers stepped in and pushed it back. A candle with a very long lower wick and a small body, for example, often signals that sellers tried to push the price down but buyers absorbed the selling and the price recovered.

Certain candlestick shapes and combinations show up again and again and carry real signal. You don't need to memorize dozens — mastering three core patterns is enough to start reading price action effectively.

Support and resistance are horizontal price levels where the market has historically reversed or paused. They're the most widely used idea in chart reading because they reflect the collective memory of traders — people remember where price stopped before, and act on it again.

To spot support and resistance, look for price levels where the chart has touched and reversed multiple times. The more times a level has held, the more significant it is. Round numbers like $50,000 for Bitcoin often act as psychological levels because many traders place orders right there.

When price breaks through strong resistance on high volume, that's called a breakout — often the start of a significant new move. When it fails and reverses instead, that's a rejection.

The same chart looks completely different depending on the timeframe you choose. A coin might be in a strong uptrend on the daily chart while pulling back on the 15-minute chart. Understanding timeframes helps you match your trades to the bigger picture.