Good Morning,

A reader hit me with a 5-star rating and guess what?

He wants me to be his mentor!

How cool is that?

Thanks a ton for this!

My mission is already set: to become not only his mentor but yours as well.

Alright, today I'm gonna help you crack the code on reading a basic chart. 

Here's what's on the menu:

• Figuring out a candlestick bar;

• Spotting a bullish & bearish trend 

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Educational

How to read a basic chart

Day trading? Nah,

Kinda feels like gambling, don't you think?

I mean, you're up against algorithms and AI.

I'm more into the long game - macro-trading and investing.

Technical Analysis (TA) only proves useful over longer timeframes. 

To build wealth, understanding the basics of Technical Analysis is essential. 

For today's quick lesson, let's decode the mystery of a candlestick chart.

How to read a Candlestick bar

Candlestick charts began in Japan in the 1600s.

They tracked rice prices. 

Steve Nison introduced candlestick patterns in his book "Japanese Candlestick Charting Techniques". 

Candlestick graphs and bar charts contain similar data.

I'll sketch an illustration to enhance your understanding:

In drawing above, the thin line presents the price range for a set period.

Let’s say a bar represent a day.

We have:

• Opening price for the day

• Highest price during the day

• Lowest price during the day

• Closing price for the day

The wider section demonstrates opening and closing prices.

• If the close is higher than the open - the candlestick mid-section is hollow or shaded green (on most charts, in my drawing is white section).

• If the open is higher than the close - the candlestick mid-section is filled in or shaded red. (In my drawing is black section)

Multiple candlestick bars together create a candlestick trend.

Let’s deep dive in trends.

What is an uptrend or bullish trend?

An uptrend signifies that the price of an asset is increasing.

To identify an uptrend, you need to look for two things:

1. Higher highs

2. Higher lows

Have a look at my illustration:

Now let’s see a candlestick bullish trend:

Above is a bullish trend, each candelstick bar represent 1 week.

As we can see we have higher highs and higher lows bars.

This means that we have an uptrend or bullish trend

What is a downtrend / bearish trend?

An downtrend signifies that the price of an asset is decreasing.

To identify a downtrend, you need to look for two things:

1. Lowers highs

2. Lowers lows

Now let’s see a candlestick bearish trend:

Above is a bearish trend, each candlestick bar represent 1 week.

As we can see we have Lower highs and Lower lows bars.

This means that we have an downtrend or bearish trend.

Sideways / horizontal Trend

A sideways trend is the horizontal price movement that occurs when the forces of supply and demand are nearly equal. 

To identify a sideways trend, both higher and lower values remain approximately at the same level.

This typically occurs during a period of consolidation before the price continues a prior trend or reverses into a new trend.

A sideways price trend is also commonly known as a "horizontal trend."

Now let’s see a candlestick horizonta/sideways trend:

Above is an horizontal trend, each candlestick bar represent 1 week.

As we can see we have Lowers and highs almost at the same level.

Conclusion

Today, you learned how to interpret a candlestick bar, understand the information it provides, and identify bullish, bearish, and sideways trends on a trading chart.

These are essential fundamentals you must understand if you want to accumulate wealth investing.

Technical Analysis is more effective when applied to candlestick bars that span longer than a single day.

Now, go and make your own research,

Mr GoBrr

Meme Of the Day

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.