Complete guide to chart reading and price action.
Technical Analysis forecasts future price direction by studying past price data and volume. Core belief: everything is already reflected in the price.
Fundamental: analyzing company value (earnings, balance sheet). Technical: studying chart patterns and price movement. Traders primarily use technical.
1. Market discounts everything
2. Prices move in trends
3. History repeats itself
Scalping: 1–5 min
Day Trading: 15min–1hr
Swing Trading: 4hr–Daily
Position Trading: Weekly–Monthly
No wicks at all. Pure buying or selling pressure from open to close. Strong trend continuation signal.
Open and close are almost equal. Signals market indecision. Potential reversal hint when appearing at extremes.
Small body with wicks on both sides. Buyers and sellers balanced. Signals consolidation or pause in trend.
Small body at top, long lower wick. Bullish reversal at support. Buyers rejected lower prices strongly.
Small body at bottom, long upper wick. Bearish reversal at resistance. Sellers pushed price back down hard.
One extremely long wick. Shows strong rejection of that price level. Price tested but could not sustain there.
HH + HL — Higher Highs and Higher Lows. Price steps up progressively. Strategy: buy the dips at Higher Lows.
LH + LL — Lower Highs and Lower Lows. Price steps down progressively. Strategy: sell the rallies at Lower Highs.
Price bounces between a defined range. No clear HH-HL or LH-LL. Trade the boundaries — buy support, sell resistance.
When price breaks a prior Higher High or Lower Low — structure shifts. This is a powerful signal for entries and exits.
A price level where buyers are strong enough to prevent further decline. Demand exceeds supply — the "floor" of price.
A price level where sellers are strong enough to prevent further rise. Supply exceeds demand — the "ceiling" of price.
When support breaks it becomes resistance. When resistance breaks it becomes support. One of the most reliable concepts in TA.
The more times price has touched and respected a level, the stronger it is. Older well-tested levels carry more weight.
Connect 2+ Higher Lows. Acts as dynamic support. Price bouncing here = buying opportunity. Break = trend weakening.
Connect 2+ Lower Highs. Acts as dynamic resistance. Price rejected here = selling opportunity. Break = trend weakening.
Draw parallel lines to form a channel. Buy the channel bottom, sell the channel top. Breakout signals a major move.
When price closes confidently beyond a trendline the trend may be changing. Wait for a retest to confirm before trading.
Left shoulder → Head (highest peak) → Right shoulder. Neckline break = bearish signal. Target = head-to-neckline distance projected down.
Upside-down Head & Shoulders. Bullish reversal after downtrend. Neckline break = buy signal. One of the most reliable patterns.
Price hits the same resistance twice then fails. Neckline break = sell. Bearish. Target = pattern height measured down.
Price touches same support twice then holds. Neckline break = buy. Bullish. Target = pattern height measured up.
Three tests of the same level. Even stronger than double top/bottom. Less common but very high probability signal.
Gradual U-shaped recovery. Slow accumulation over time. Breakout of the rim = strong bullish signal. Also called "Saucer."
Strong impulsive move (flagpole) + brief parallel consolidation (flag). Breakout continues in the direction of the pole.
Strong move followed by a converging triangle consolidation. Similar to flag but triangular shape. Breakout = continuation.
Higher lows + lower highs converging. A coiling spring. Breakout can go either way — volume confirms direction.
Flat top + rising bottoms. Bullish bias. Buyers getting more aggressive. Usually breaks to the upside.
Flat bottom + falling tops. Bearish bias. Sellers getting more aggressive. Usually breaks to the downside.
U-shaped cup + small handle consolidation. Breakout = bullish. Minimum target = cup depth added to breakout point.
When price confidently closes beyond a key level. Requires strong volume and conviction. Fakeouts are very common — be patient.
After breaking out, price returns to the broken level. This is the ideal entry point — best risk/reward with confirmation built in.
Price touches the broken level and bounces — confirms role reversal. Enter on the bounce candle, SL just beyond the level.
Price breaks back through the level on retest. Confirms a fakeout. Exit quickly or consider a trade in the opposite direction.
Enter immediately on breakout or pattern signal. Higher risk, potentially higher reward. More false signals. Suitable for experienced traders.
Wait for retest confirmation before entering. Lower risk, slightly smaller reward. Fewer setups, higher quality. Recommended for beginners.
Build the position in parts. 50% at entry zone, add on retest. Improves average entry price and reduces emotional pressure.
Pre-set your entry at a specific price level. Eliminates emotional decision-making. Trade executes even while you are away.
The nearest significant resistance (long) or support (short) becomes your first TP. Clean, logical and widely respected.
Pattern height measured from breakout = minimum target. H&S, flags, triangles all have predictable measured targets.
1.272 and 1.618 extension levels are strong TP targets. Use Fibonacci retracements for entry, extensions for profit targets.
Close 50% at TP1, move SL to break-even, let remaining run to TP2. Locks in profit while giving the trade room to extend.
| Win Rate | 1:1 R:R | 1:2 R:R | 1:3 R:R |
|---|---|---|---|
| 30% Wins | −40% | −10% | +20% |
| 40% Wins | −20% | +20% | +60% |
| 50% Wins | 0% | +50% | +100% |
| 60% Wins | +20% | +80% | +140% |
With just 40% win rate and 1:3 R:R, you still grow your account by 60%. This is the power of risk management.