How to Read a Candlestick Chart for Stock Trading

List of 5 Tips About Price Action Revealed

A skill that all traders need to hone and strive to improve constantly is how to read a candlestick chart for stock trading. Candlestick patterns of price action matter. What price is doing tells a great deal about which Stock Market Participant Groups are controlling price action.

The candlestick chart example below shows price action underlined on the left at an extreme Angle of Descent™ into the lowest low before a bottom commences. Even as this final sell down occurs, it is obvious that the steepness of the Angle of Descent is unsustainable. In addition, the TechniTrader Quiet Accumulation (TTQA) indicator in the bottom chart window with red bars is exposing Smaller Fund capitulation as the stock tumbles.

Understanding how to read a candlestick chart for stock trading is important in that realizing 5 Tips about stock price action are revealed when you know who is in control of price.

List of 5 Tips About Price Action Revealed is below:

  1. How price will behave
  2. How price will react to support and resistance
  3. How long price will move in that pattern
  4. What to look for ahead of sudden price moves
  5. When a top or bottom is underway

In learning how to read a candlestick chart for stock trading, see the sideways candlestick pattern after the low, which is indicative of the Buy Side Institutions buying in incrementally with controlled and bracketed orders in Dark Pools over time. Since some Retail Traders and High Frequency Traders (HFTs) are still trying to Sell Short against the strength of the Buy Side Institutions’ buying, the up-and-down and day-to-day price candlestick pattern forms.

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Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using a MetaStock chart, courtesy of Innovative Market Analysis, LLC dba MetaStock

Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses

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