Start with the axes and settings
A stock chart plots price against time. Time usually runs horizontally and price vertically. Before interpreting the shape, confirm the security, currency, date range, and interval. A daily chart and an intraday chart describe different slices of activity even when they show the same stock. Check whether quotes are delayed and whether the latest interval is still forming.
A line chart often connects closing prices, although a tool may allow other price fields. That makes it relatively easy to follow broad changes, but it hides movement within each interval. Changing the displayed range or vertical scale can make the same price history look more or less dramatic. Read the labels before drawing conclusions from the visual slope.
Decode a candlestick
A candlestick summarizes the open, high, low, and close for its interval, often abbreviated OHLC. The body spans the opening and closing prices. The thin extensions, called wicks or shadows, reach toward the interval’s high and low. A longer body shows a larger open-to-close difference; longer wicks show prices that moved beyond that body during the interval.
Colors commonly distinguish a close above the open from a close below it, but conventions and settings vary. Do not assume green always means the stock rose relative to the previous day’s close. A candle describes its own interval. An unfinished candle can change before the interval ends, and a sequence of candles does not establish what the next one will do.
Keep volume separate from price
Volume measures the quantity of shares traded during an interval, not the share price or the number of distinct investors. It is often displayed as bars beneath the price chart. Make sure the volume interval matches the price interval. A taller bar indicates more shares traded than a shorter bar on the same scale, not automatically a more valuable company.
Volume provides context for activity, but it does not explain every participant’s motivation. Every completed trade has a buyer and seller, so heavy volume alone cannot prove that informed investors agree on a direction. Likewise, a price pattern or indicator is a description derived from data, not a guarantee. Separate what you can observe from the story you are tempted to attach to it.
Check adjustments before comparing histories
Corporate actions can affect historical comparisons. A stock split changes the number of shares and the price per share without, by itself, creating a corresponding change in the investor’s total holding value. An unadjusted chart may show a price break at the split. An adjusted series restates earlier observations to make the history more comparable under the provider’s methodology.
Adjustment practices differ: a chart may adjust for splits, dividends, or both. Read the data description rather than assuming an adjusted price chart represents your complete investment return. It does not automatically include your purchase timing, fees, or taxes. Use charts to understand recorded price activity, then consult business information and investment disclosures for questions a price picture cannot answer.
Common questions
Does a green candle mean a gain since yesterday?
Not necessarily. It commonly means the interval closed above its own opening price. Check the chart’s color convention and compare closing prices separately.
Can a chart pattern predict the next price move?
No pattern guarantees an outcome. Charts summarize historical observations, and settings, incomplete intervals, and data adjustments can change how those observations appear.