📊 How to Analyse a Stock Chart (Beginner-Friendly Guide with Example)

When you first look at a stock chart, all the red and green candles might feel confusing. But once you understand the basics, you’ll realize that charts are just a story of price and emotions. Let’s break down how to analyse the chart you see above.

1. Understanding the Chart

• This is a candlestick chart from NSE (BSE 5-min timeframe).

• Each candle represents 5 minutes of price action.

• Green candle = Price closed higher than it opened (buyers strong).

• Red candle = Price closed lower than it opened (sellers strong).

👉 Always remember: Charts = battle between buyers and sellers.

2. Identify the Trend

Looking at the chart:

• The price starts higher near 2260 but keeps making lower highs and lower lows.

• This is a downtrend — meaning sellers are dominating.

• If you just follow the overall slope, you can tell the market was weak throughout.

📌 Rule: “Trend is your friend.” If trend is down, avoid aggressive buying.

3. Support & Resistance Levels

• Resistance = where price struggles to go higher (like a ceiling).

• Support = where price struggles to go lower (like a floor).

From this chart:

• Resistance around 2230–2240 (price tried but failed to stay there).

• Support near 2170–2180 (price bounced multiple times here).

These levels act as decision zones for traders.

4. Volume Analysis

• Notice how the volume bars at the bottom spike when the price falls.

• This means sellers are not just strong, but also backed by high participation.

• A fall with high volume = strong selling pressure.

5. Candlestick Patterns

• Around mid-chart, we see long red candles after a green attempt → this shows failed recovery.

• Towards the end, the price dips sharply with a big red candle, followed by a small green one = possible temporary bounce.

6. Indicators (Optional for Beginners)

Here, a Volume SMA (moving average) is shown:

• If volume is above average during a fall, that confirms strong selling.

• You can also add Moving Averages (MA) on price to spot trend easily.

  

7. Conclusion from This Chart

• The stock was in a clear downtrend.

• Strong selling pressure confirmed by volume.

• Support near 2170 — if this breaks, price could go even lower.

• For a beginner: best strategy here is to avoid buying in a falling market and wait for confirmation of trend reversal.

🔑 Key Takeaway

Reading a chart is like reading a book — once you know the characters (candles, volume, trend), the story becomes clear. Always start by identifying the trend, then check support/resistance, and finally confirm with volume and candlestick patterns.