First identify the market, price adjustment and bar interval. The same shape can mean different things on a daily, weekly or intraday chart.
Set the chart context before naming a pattern
Check the security, exchange, currency, session, bar interval and whether the latest bar has closed. A five-minute bar and a daily bar summarize different periods. A weekly chart can help describe a longer trend, while a short interval can emphasize noise. Technical analysis describes price and volume behavior; it does not establish the business’s fair value or predict a certain outcome.
The illustration uses 80 synthetic completed bars numbered 1–80, with fictional USD price units and invented share volumes. They are not actual exchange sessions, recommendations or evidence of a profitable strategy. The deliberately flat opening segment makes the later indicator arithmetic reproducible.
Background source: Fidelity: technical analysis and its inputs
Read the four prices in one candle
The body spans the open and close; the wick reaches the high and low. On synthetic bar 35, open is 100, high 110.60, low 99.40 and close 110. The price rose 10% from the previous close 100, but touched a lower value during the bar. A long body describes that bar’s movement, not who bought it or what the next bar must do.
In our chart green means close at or above open and red means close below open. Some markets and platforms reverse those colours. Read the legend and actual numbers rather than assuming red always means a loss. A very thin body can represent an unchanged open and close; the wick still contains information.
Use an average to describe, not erase, the path
SMA20 is the arithmetic mean of the last 20 closing prices including the current completed bar. On bar 35, the window contains nineteen closes of 100 and one of 110, so SMA20 is 100.50. The average reacts more slowly than the new close 110 because most of its window still contains the old level.
A price above a rising average can describe an upward trend under that chosen window. It is not a guarantee of a successful entry, nor is the average a promised floor. Changing the period or using an exponential average changes the line; write down the settings before comparing screenshots from different platforms.
| Synthetic bar35 | Value | Meaning |
|---|---|---|
| Open / close | 100 / 110 | A 10% close-to-close rise |
| High / low | 110.60 / 99.40 | Full intrabar range |
| SMA20 | 100.50 | Includes bar35 close |
Mark areas and ask what would invalidate them
Repeated highs or lows can suggest areas to observe, but the chart does not contain a guaranteed buying or selling wall. Mark an area from information already available at that moment, then state what price action would contradict the idea. A later chart makes past turning points obvious and can hide how uncertain they were in real time.
Our dataset is for reading components, not selecting an optimal support level. If you practice a rule, record its definition before looking at subsequent bars and include failed examples. A collection of attractive historical patterns without failed trades, costs or a stated test is not a backtest.
Check adjustments, gaps and the lower panel
Splits, distributions, session settings and adjustment choices can change a historical price series. Compare equivalent data conventions before concluding two charts disagree. A blank indicator during warm-up is not zero. An apparent overnight jump also needs its actual session and corporate-action context.
The lower panel shows shares traded during each synthetic bar. Its colour follows the price-bar convention, not a measured net cash inflow. Each trade has a buyer and a seller. To compare activity, use a defined volume baseline rather than reading the height of one bar as institutional conviction.
Follow a repeatable reading order
Start with context and completed bars, then price structure and the average, then volume, then one momentum indicator. Finish with a written scenario and what you would do if it fails. Several indicators built from the same closing prices are correlated observations, not independent votes.
Download the OHLCV/indicator CSV to inspect bar 35, then continue with the MACD example. These files are manual learning data. Numbrite does not provide a chart uploader, live technical signals or automated orders in this release.
Download the learning data and worksheets
Put it into practice
Use the numbered chart and CSV together, then learn how the two MACD lines are built.
Read the MACD example