Knowledge LadderLevel 1: The Come-UpReading Basic Price Charts
Level 1 - Beginner15 min

Reading Basic Price Charts

The Come-Up - Beginner Level

A price chart is a visual story of what a stock has been doing — where it's been, where it is now, and (if you learn to read it) clues about where it might be headed. Every trading platform from Robinhood to Bloomberg shows you charts, and being able to read one is as fundamental as being able to read a text message. The most basic chart is a line chart: it connects closing prices over time into a single line. If the line is going up and to the right, the stock has been rising. Simple. But line charts only show you one data point per period (the closing price) — and that's leaving a lot of information on the table.

Candlestick charts are the standard on Wall Street and they tell a much richer story. Each 'candle' represents a specific time period — one day, one hour, one minute, whatever you choose. A candle has four pieces of data: the open (where the price started), the close (where it ended), the high (the highest price during that period), and the low (the lowest price). The thick part of the candle is called the body. If the close is higher than the open, the candle is typically green — the stock went up during that period. If the close is lower than the open, the candle is red — the stock went down. The thin lines above and below the body are called wicks or shadows, and they show the high and low.

Reading candles in sequence is where it gets powerful. A series of green candles with higher highs and higher lows shows a stock in an uptrend — buyers are in control. A series of red candles with lower highs and lower lows is a downtrend — sellers are running the show. Long wicks on a candle tell you there was a fight between buyers and sellers during that period. For example, if you see a candle with a very long lower wick (called a hammer), it means the price dropped significantly during the day but buyers stepped in and pushed it back up before the close. That's often a bullish signal near the bottom of a selloff.

Volume bars usually appear at the bottom of the chart and they're just as important as the price candles themselves. Volume shows you how many shares traded during each period. A big price move on high volume is more significant than the same move on low volume — high volume means conviction. If a stock breaks above a key level on heavy volume, that breakout is more likely to hold. If it breaks out on thin volume, it might be a fake-out. When you look at a chart, always check the volume. Price tells you what happened; volume tells you whether people actually believed it. Together, price and volume are the foundation of everything in technical analysis.

Key Takeaways

Line charts show closing prices over time — simple but limited

Candlestick charts show open, close, high, and low for each period

Green candles = price went up; Red candles = price went down

Long wicks (shadows) indicate a battle between buyers and sellers

Volume bars show how many shares traded — high volume confirms moves

Price tells you what happened; volume tells you if people believed it

Related Concepts

Candlestick PatternsVolumeSupport & ResistanceTechnical Analysis
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Reading Basic Price Charts — Beginner Level Education | The Trap Ledger