A simple guide to understanding price movements, candlesticks, and trends
When you open a Forex trading platform, the first thing you’ll see is a chart full of moving prices and colorful candles. It might look confusing at first — but once you learn how to read it, the chart becomes your most powerful trading tool.
Let’s break it down into simple parts.
📊 What Is a Trading Chart?
A trading chart shows how the price of a currency pair has changed over time. It helps you spot patterns, trends, and trade opportunities.
The most commonly used chart in Forex is the candlestick chart — because it gives more information than a simple line chart.
🕯️ What Are Candlesticks?
Each candlestick shows the price movement during a specific time period — like 1 minute, 1 hour, or 1 day.
A candle shows 4 things:
Open – the price when the candle started
Close – the price when the candle ended
High – the highest price during the time
Low – the lowest price during the time
Color matters:
Green (or white) = price went up (bullish candle)
Red (or black) = price went down (bearish candle)
The body is the thick part between open and close.
The wicks (or shadows) are the thin lines showing the highs and lows.
📌 Each candle tells a story of what buyers and sellers did in that time period.
⏱️ What’s a Timeframe?
Timeframes control how long each candle represents.
1-minute chart: each candle = 1 minute
1-hour chart: each candle = 1 hour
4-hour chart: each candle = 4 hours
Daily chart: each candle = 1 full day
🧠 Use short timeframes for quick trades, longer ones to spot bigger trends.
📈 How to Spot a Trend
A trend shows the overall direction of the market.
3 basic trends:
Uptrend: higher highs and higher lows
Downtrend: lower highs and lower lows
Sideways: price moves in a range (no clear direction)
📌 Use trendlines or moving averages to help spot direction.
📏 Support and Resistance Levels
These are horizontal lines where price tends to bounce or reverse.
Support: a price level where the market often stops falling and goes up
Resistance: a price level where the market often stops rising and drops
These levels are key for:
Finding entry points
Placing stop-losses and take-profits
Avoiding bad trades
🧪 Using Indicators (Optional for Beginners)
Indicators can help confirm what you see on the chart.
Start simple:
Moving Average: smooths out price to show direction
RSI (Relative Strength Index): tells you if price is overbought or oversold
Don’t overload your chart — 1 or 2 indicators is enough.
👁️ Final Chart Reading Tips
Use candlesticks to see market sentiment
Use timeframes to match your trading style
Use support, resistance, and trendlines to spot trade setups
Use indicators to confirm, not decide
📌 You don’t need to predict every move — you just need to recognize key patterns.