Lesson 8 · Advanced · 9 min
Technical analysis and candlesticks
How to read Japanese candlesticks, find support and resistance and identify a trend.
The Japanese candlestick
A candle shows four prices for a period: open, high, low and close. The body is between open and close, the wicks reach the high and low. A green candle means the price rose, a red one that it fell.
Trend
An uptrend means each new high and low is above the previous ones; a downtrend — below. Trading with the trend is easier than against it.
Support and resistance
Support is a level from which the price has bounced up several times; resistance is a level from which it has turned down. After a breakout, levels often swap roles.
Tools on the chart
The terminal has trend lines, channels, Fibonacci levels and horizontal levels. Use them to mark entry, stop and target points in advance.
Key takeaways
- A candle = open, high, low, close
- Trade with the trend
- Levels help choose the stop and target