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How to Read a Stock Chart

Candlestick charts, volume bars, support and resistance — a plain-English guide to what a price chart is actually telling you.

A stock chart displays price over time. The most common type is the candlestick chart, where each "candle" represents a time period (e.g. one day). A green candle means the price closed higher than it opened. A red candle means it closed lower.

Each candle has four data points: the open, the close, the high, and the low. The thin lines above and below the candle body are called "wicks" and show the high and low during the period.

Volume bars at the bottom show how many shares traded. High volume on a green candle is bullish — it means buyers have conviction. High volume on a red candle is bearish.

Support is a price level where buyers have repeatedly stepped in to stop a decline. Resistance is a level where sellers have historically stopped upward movement. When price breaks through resistance, that old resistance often becomes new support.

Moving averages — particularly the 50-day and 200-day — smooth out price noise and show the underlying trend. When price is above both moving averages, the stock is in an uptrend. When the 50-day crosses above the 200-day (a "golden cross"), it is considered a strong bullish signal.

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