You do not need 47 indicators. Master these five basics and you can read any chart in under a minute.
A single candlestick shows four numbers for its time window: open, high, low, close. Green (or hollow) means the close was above the open; red (or filled) means the close was below the open. The thin lines above and below the body are the wicks — they show the full range.
Long lower wicks after a downtrend often signal buyers stepping in; long upper wicks after an uptrend often signal sellers stepping in. Neither is a guarantee, but both are worth noticing.
The 50-day and 200-day simple moving averages are the two most-watched lines in finance for a reason. Price above the 200-day is generally treated as a long-term uptrend; price below is treated as a downtrend. The 50-day crossing above the 200-day (the "golden cross") is a classic bullish signal.
Do not obsess over which specific moving average is "right" — they are lagging by construction. Their real value is defining the trend regime, not timing entries and exits.
Volume is the "importance" dial for every price move. A breakout above a prior high on 3x average volume is a much stronger signal than the same breakout on average volume. Conversely, price moves on shrinking volume often fail.
Volume divergences (price making new highs while volume shrinks) are among the most reliable warnings that a trend is losing steam.
Draw horizontal lines at prices where the stock has repeatedly reversed. These are levels where the market has previously agreed on value. Breakouts through resistance and breakdowns through support are the two most-watched setups in retail trading for good reason.
1. Bull flag — a strong upward move followed by a tight sideways consolidation, then continuation.
2. Head and shoulders — three peaks with the middle highest, marking a potential trend reversal.
3. Double bottom — two roughly equal lows separated by a bounce, marking a potential bottoming.
4. Cup and handle — a rounded bottom followed by a small pullback and breakout — the William O'Neil classic.
5. 200-day reclaim — price recovering above the 200-day moving average after weeks below it — a regime change worth respecting.
The trend, defined by price relative to the 200-day moving average. Every other signal — indicators, patterns, oscillators — should be interpreted through that trend lens.
Individual candlesticks are noisy. Multi-candle patterns confirmed by volume and context are moderately reliable — treat them as probability shifts, not certainties.
Two or three at most. A chart cluttered with 10 indicators typically produces contradictory signals and analysis paralysis.
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