Core building blocks
- Chart types and timeframes
- Trends
- Support and resistance
- Indicators
- Candlestick patterns
Chart types
| Chart | Shows | Best for |
|---|---|---|
| Line | Closing prices only | Big-picture trends |
| Bar | Open, high, low, close | Detailed price action |
| Candlestick | Open, high, low, close with coloured bodies | Most traders — easy to read |
Timeframes
Each candle represents a period — from one minute to one month. Many traders use a higher timeframe to identify the trend and a lower one to time entries (for example, daily for direction and 1-hour for entries).
Trends
An uptrend makes higher highs and higher lows; a downtrend lower highs and lower lows. Trading with the trend usually gives better odds than fighting it.
Support and resistance
Price levels where buying or selling has repeatedly appeared. They're the foundation for placing entries and stop-losses. Read support and resistance explained.
Indicators
- Moving averages — smooth price to show trend direction
- RSI — measures momentum; readings above 70 or below 30 suggest stretched conditions
- MACD — trend and momentum based on moving averages
- ATR — measures volatility; useful for setting stop distances
Candlestick patterns
- Pin bar — long wick showing rejection of a price level
- Engulfing — a candle that fully covers the previous one, suggesting a shift
- Doji — open and close nearly equal, showing indecision
Patterns work best at meaningful levels and in the context of the trend.
Limitations
Charts can't anticipate surprise news, and the same pattern can fail many times in a row. Combine technical analysis with sound risk management and awareness of the economic calendar.
Frequently asked questions
Does technical analysis work?
It's a framework for making consistent decisions and managing risk, not a way to predict prices with certainty. Results depend on rules, risk management and discipline.
Which timeframe is best?
Higher timeframes (4-hour, daily) produce fewer false signals and suit part-time traders. Lower timeframes need more screen time.
CFDs and spread bets are complex instruments and come with a high risk of losing money rapidly due to leverage. Most retail investor accounts lose money when trading these products. You should consider whether you understand how they work and whether you can afford to take the high risk of losing your money. Content is general information, not financial or tax advice.