To read a crypto chart, start with the candlesticks. Each one shows four prices for a set period: open, high, low and close. The body runs from the open to the close. The thin lines, called shadows or wicks, mark the highest and lowest prices traded. A hollow or green candle means the price closed above where it opened, and a filled or red candle means it closed below. Next, look at the volume bars under the chart to see how much traded. Then check where the price sits against support, resistance and its moving averages. That order turns a busy screen into a few clear questions.
What a single candlestick tells you
StockCharts' ChartSchool describes the candle this way. The hollow or filled part is "the body" (also called "the real body"), and "the long thin lines above and below the body represent the high/low range and are called 'shadows'."
- Open: the first traded price of the period.
- Close: the last traded price of the period.
- High: the top of the upper shadow.
- Low: the bottom of the lower shadow.
ChartSchool also says what the colour means. A candle "where the close is greater than the open" indicates buying pressure, and a filled candle, where the close is below the open, indicates selling pressure.
The shape matters as much as the colour:
- A long body with short shadows means the price moved firmly in one direction and stayed there.
- A long upper shadow means buyers pushed the price up but could not hold it.
- A long lower shadow means sellers pushed the price down but buyers brought it back.
- A doji, where open and close are almost equal, shows a period with no winner. ChartSchool warns: "On their own, doji are not enough to mark a reversal."
Where candlesticks come from
According to ChartSchool, "the Japanese began using technical analysis to trade rice in the 17th century". Much of the credit for candlestick development goes to a rice trader named Homma from the town of Sakata. Citing Steve Nison, it adds that "candlestick charting first appeared sometime after 1850."
Pick the time frame first
Every candle covers one period. That period can be one minute, one hour, four hours, a day or a week. The same market can look like an uptrend on a weekly chart and a sell-off on a 15-minute chart, so decide which period you care about before you read anything else.
- Shorter frames (5-minute, 15-minute, hourly) show more detail and more noise.
- Longer frames (daily, weekly) show the larger trend, and each candle carries more trading.
- Many chart readers check a longer frame for direction and a shorter frame for detail.
Crypto markets do not close. A US regulator noted the same point in May 2026: on 29 May 2026 the Commodity Futures Trading Commission said that "derivatives referencing crypto assets may be well-suited for 24/7 trading". So the "open" and "close" of a daily crypto candle are not a market bell. They are the cutoff time your chart uses, and two charts with different cutoffs can draw slightly different daily candles.
Read the volume bars
The bars along the bottom show how much of the asset traded in each period. A taller bar means more trading. Volume is most useful as a check on price: a breakout on heavy volume carries more weight than one on thin volume.
This idea comes from Dow Theory, described below. ChartSchool's summary puts it this way: "In a primary bull market, volume should be heavier on advances than during corrections."
Support and resistance
ChartSchool's definitions:
- Support is "the price level at which demand is thought to be strong enough to prevent the price from declining further."
- Resistance is "the price level at which selling is thought to be strong enough to prevent the price from rising further."
Two practical points follow from the same source:
- Roles can flip. "Once the price breaks below a support level, the broken support level can turn into resistance." The reverse applies when resistance breaks.
- Draw zones, not exact lines. "Because technical analysis is not an exact science, creating support and resistance zones is useful."
To find them, look for prices where the chart turned several times, and for round numbers where many orders tend to cluster.
Which candlestick pattern are you looking at?
Answer two questions about the trend and the candles on your chart to see which pattern from the article, if any, they match.
What was the trend before the candles you are reading?
- An uptrend → next question
- A downtrend → next question
- No clear trend → Find the trend first
After the uptrend, which shape do the latest candles make?
- One candle that opens higher, trades much higher, then closes near its open, leaving a long upper shadow → Shooting star (bearish reversal)
- A small-bodied candle, then a larger candle whose body completely engulfs it and closes against the uptrend → Bearish engulfing (bearish reversal)
- A long white body, then a gapped-up small body, then a down close below the midpoint of the first candle → Evening star (bearish reversal)
- A candle whose open and close are almost equal → Doji (no winner)
- None of these → No pattern from the article
After the downtrend, which shape do the latest candles make?
- One candle that moves well below the open but rallies to close well above the intraday low → Hammer (bullish reversal)
- A small-bodied candle, then a larger candle whose body completely engulfs it and closes against the downtrend → Bullish engulfing (bullish reversal)
- A long dark candle, then a short candle that gaps down, then a long light candle closing above the midpoint of the first body → Morning star (bullish reversal)
- A candle whose open and close are almost equal → Doji (no winner)
- None of these → No pattern from the article
The long upper shadow shows buyers pushed the price up but lost control by the close. ChartSchool says single-candle formations like this require confirmation, so check the next candle and the volume before counting it.
The second body swallows the first and closes against the uptrend. Two-candle formations also need confirmation from the next candle or the volume.
A strong up candle, a small pause, then a down close below the first candle's midpoint. Read it in light of the uptrend before it and check whether volume supports the move.
Sellers pushed the price down but buyers brought it back, leaving a long lower shadow during a decline. As a single candle, it needs confirmation from the next candle or the volume.
The same structure as the bearish version, at the end of a downtrend: the second body engulfs the first. Look for the next candle or the volume to support it.
A strong down candle, a small gapped-down pause, then a light candle closing above the first body's midpoint. Read it against the downtrend before it and check the volume.
Open and close are almost equal, so the period had no winner. ChartSchool warns that on their own, doji are not enough to mark a reversal.
Each pattern is read in light of the trend before it. Check a longer time frame, a moving average or the run of highs and lows, then come back to the candles.
Read the candles for body length and shadows instead: a long body with short shadows means a firm move, and long shadows show a side that pushed but could not hold.
This only matches shapes to the article's ChartSchool definitions; it does not measure your candles, cover other patterns, or predict where the price goes next.
Moving averages
A moving average smooths price into one line, which makes the trend easier to see.
- Simple moving average (SMA): "formed by computing the average price of a security over a specific number of periods" (ChartSchool).
- Exponential moving average (EMA): reduces lag "by applying more weight to recent prices."
Points to keep in mind:
- They lag. "Because moving averages are based on past data, they tend to lag behind price data." They confirm a trend. They do not predict one.
- They can act as levels. Moving averages "can also act as support in an uptrend and resistance in a downtrend."
- Crossovers. When a shorter average crosses above a longer one, ChartSchool calls it a bullish crossover, or golden cross. A cross below is a bearish crossover, or death cross. A pairing often cited is the 50-day and 200-day SMA, which ChartSchool calls "medium-term, perhaps even long-term."
Market cap: not on the chart, but worth checking
Market capitalisation does not appear on a price chart, but it helps you compare coins. CoinGecko's methodology calculates it as the current price in USD multiplied by the circulating supply. A coin with a low price can still have a very large market cap, and the reverse is also true.
Common candlestick patterns
Patterns are groups of one to three candles. Each one is read in light of the trend that comes before it. The definitions below follow ChartSchool's Candlestick Pattern Dictionary.
Bearish reversal patterns (after an uptrend)
- Shooting star: a single candle in an uptrend that "opens higher, trades much higher, and then closes near its open." The long upper shadow shows that buyers lost control.
- Bearish engulfing: a small-bodied candle followed by a larger candle whose body "completely engulfs the previous day's body" and closes against the uptrend.
- Evening star: three candles: "a long white body day followed by a gapped up small body day," then "a down close with the close below the midpoint of the first day."
Bullish reversal patterns (after a downtrend)
- Hammer: the price "moves significantly lower after the open but rallies to close well above the intraday low," forming during a decline.
- Bullish engulfing: the same structure as the bearish version, at the end of a downtrend. The second body engulfs the first.
- Morning star: a long dark candle, then a short candle that gaps down, then a long light candle that closes "above the midpoint of the body of the first day."
ChartSchool notes that most single- and double-candle formations "require confirmation before action". In practice, the next candle or the volume should support the signal before you count it.
Dow Theory: the idea behind trend reading
Much of chart reading rests on Dow Theory. ChartSchool traces its history: it began in Charles Dow's late-19th-century editorials, S.A. Nelson named it, William Hamilton refined it, and Robert Rhea set it out as assumptions and theorems in 1932. Its main ideas, in ChartSchool's summary:
- Three kinds of movement. Primary moves "can last from a few months to many years". Secondary moves last a few weeks to a few months and "move counter to the primary trend". Daily fluctuations last from hours to days.
- Three stages. A bull market moves through accumulation, a big move and excess. A bear market moves through distribution, a big move and despair.
- Averages must confirm. In Dow's original form, "both the Industrial Average and the Rail Average must confirm each other."
- Volume confirms the trend. Volume should be heavier on moves in the direction of the primary trend.
- Trends persist. "Once the trend has been identified, it is assumed valid until proved otherwise."
Dow wrote about stock averages, not cryptocurrencies. Applying these ideas to crypto is an adaptation, not a tested rule.
A simple reading routine
- Choose the time frame that matches the question you are asking.
- Find the trend on a longer frame, using a moving average or the run of highs and lows.
- Mark the nearby support and resistance zones.
- Read the most recent candles for shape and pattern.
- Check whether volume supports what the candles suggest.
Limitations: the pattern definitions and Dow Theory summary come from one reference, StockCharts' ChartSchool, and none of these tools predicts prices reliably.
