Reading the chart

Charts show you what price has done. They do not tell you what it will do. Keep your first method simple enough to follow.

Candlesticks

Each candle shows the open, high, low and close for a period of time. A candle's body runs from open to close, and the thin wicks show the high and low.

Trend

• Uptrend: a series of higher highs and higher lows.
• Downtrend: a series of lower highs and lower lows.
• Range: price moves sideways between two levels.

Support and resistance

Support is an area where price has previously stopped falling. Resistance is an area where it has previously stopped rising. Treat these as zones and not exact lines. They break often.

Timeframes

Check a higher timeframe for the bigger picture, then a lower one for detail. Fewer charts are better than more. Every indicator you add gives you another reason to second-guess your plan.

Writing your setup down

A setup should be specific enough that someone else could check it. For example: "Uptrend on the 4-hour chart, price returns to a support zone, I enter only if a 1-hour candle closes back above that zone." This is an illustration of how to write a rule, not a recommended strategy.

Key point

No chart pattern works every time. The aim of a setup is to give you a consistent, testable reason to take a trade, with your risk fixed in advance.