How to Read Stock Charts: Candles, Volume, Timeframe and Levels

To read a stock chart, read it in this order: the quote, the chart type, one candle, volume, the timeframe and scale, then trend and levels. Each bar or candle shows four prices for its period, the open, high, low and close; volume underneath shows how many shares traded. From there you can see the trend, the levels where price turned before, and whether a move came on heavy or light trading. The quote panel next to the chart gives the context the chart does not show, such as valuation and dividends.

Step 1: the quote panel

Before the chart, a stock page shows a quote. The usual fields:

• Ticker. The short symbol that identifies the stock on its exchange.
• Last price and change. The latest trade, and its change from the previous close, in dollars and percent.
• Open, high, low, previous close. The day's first trade, its extremes, and yesterday's close. These are the same four prices a daily candle draws.
• Bid and ask. The bid is the highest price a buyer will pay at that moment, the ask the lowest price a seller will accept; the difference is the spread.
• Volume. The number of shares traded so far that day, often shown next to its average.
• 52-week range. The lowest and highest prices of the past year, which tells you where today's price sits within that year.
• Market capitalization. The share price times the number of shares outstanding: what the market values the whole company at.
• P/E ratio. The price divided by earnings per share over the past 12 months, a way to compare how expensive a stock is with its past or with other companies.
• Dividend yield. The dividends paid over a year divided by the share price.

Step 2: the chart type

The same prices can be drawn in several ways. Here are the daily closes of the S&P 500 ETF as a line, next to the same days as candlesticks:

• Line chart. One point per period, the close, joined by a line. The cleanest view of the trend, but it hides how far price moved within each day.
• Bar chart. A vertical bar from the low to the high, with a tick to the left for the open and to the right for the close.
• Candlestick chart. The same four prices, with a body between the open and the close. The body is usually green or hollow when the close is above the open, red or filled when it is below; the thin lines above and below, the wicks, reach the high and the low.

Variants change what the color means: hollow candlesticks compare the close with the previous close as well, and a Heikin Ashi chart averages prices to smooth the trend.

Step 3: read one candle

Take June 5, 2026 on the S&P 500 ETF, a dividend-adjusted series, so the prices are slightly below those quoted that day. The ETF opened at 748.52, made a high of 749.03, fell to a low of 731.82 and closed at 733.83. The candle is red, with a long body: the close was 14.69 below the open. The wick above is short, the high was barely above the open; the wick below is about 2, the close was near the low of the day. Against the previous close of 753.27, the day was down 2.58%, the largest daily fall in the 120 days on the chart below.

Step 4: volume

Volume is the bar chart under the prices. One bar per period, its height the number of shares traded. Compare each bar with its recent average rather than with zero:

On June 5, 2026, 93,989,400 shares of the ETF traded, 2.01 times the average of the previous 20 sessions: the heavy volume came with the large fall. On August 4, the ETF rose 1.80% on 1.43 times its average volume. Volume does not say which way price will go next; it says how many participants were behind the move. More on reading it in trading volume.

Step 5: timeframe and scale

Each bar covers one period, and the period changes the story. On a daily chart, the six months above show a rise with dips; on a monthly chart, the same months are six bars of a much longer trend. Use the timeframe that matches how long you plan to hold: daily or weekly bars for trades of weeks or months, intraday bars for trades of hours.

The scale matters over long periods. On a linear scale, equal price changes take equal heights; on a logarithmic scale, equal percentage changes do.

On monthly closes, the ETF fell 55.51 between October 2007 and February 2009, a 50.8% loss, and 106.67 between December 2021 and September 2022, a 23.9% loss. On the linear chart, the 2022 fall looks about twice as large; on the log chart, the 2008 fall is the deeper one, which matches what an investor lost.

Step 6: trend and levels

With the chart set up, three questions organize the reading:

1. What is the trend? Higher highs and higher lows, or a price above a rising moving average, describe an uptrend; the reverse a downtrend. See trend trading.
2. Where are the levels? Previous swing highs and lows, where price turned, are the first candidates for resistance and support. See support and resistance, with a test of how often such levels held.
3. What is the last bar saying? A close beyond a level is a breakout; a long wick back from a level is a rejection. Either way, it is a reading to confirm with the next bars, not a prediction.

The schematic below puts the three questions on one move: the swings step higher, the first swing high becomes a level once price clears it, and when price comes back to that level the candle there, with its long lower wick, is the last thing read.

Chart patterns are shapes that combine these readings, such as a double bottom on a support. Our bench measures how they did on real markets, as described in our methodology. More guides are in technical analysis.