What a price chart shows
A price chart is just a picture of a share's price over time. Time runs along the bottom, from left (older) to right (newer), and the price runs up the side. That is the whole foundation. Everything else is detail layered on top. A chart will not tell you whether a company is good — only its financial reports do that — but it shows you the story of how its price has travelled, which is useful for choosing your moment.
The simple line chart
The easiest chart is a single line connecting the closing price of each day. When the line climbs, the price has been rising; when it falls, the price has been dropping. For a beginner, a line chart is often all you need to see the big picture: is this share generally heading up over the months, drifting down, or going sideways? Start here before worrying about anything fancier.
Candlesticks — more detail in each bar
You will often see charts made of little coloured bars called candlesticks. Each candle usually covers one day and packs in four facts: the price at the start of the day, the price at the end, and the highest and lowest points reached. A candle coloured one way means the price finished higher than it started; the other colour means it finished lower. You do not need to memorise patterns — just know each candle is one day's mood in a single shape.
Volume — the crowd beneath the price
Beneath the price you will usually see vertical bars called volume. Volume is simply how many shares changed hands that day — how busy the crowd was. It matters because a price move on heavy volume means many people agreed and is taken more seriously, while a move on thin volume can be a fluke. Big price moves backed by big volume carry more weight than quiet ones.
Spotting the trend
The most useful thing a chart shows is the trend — the general direction over time. An uptrend makes higher peaks and higher dips as it climbs. A downtrend makes lower peaks and lower dips as it slides. A sideways trend just drifts within a range, going nowhere in particular. Always step back and ask which of these three you are looking at before reading anything else into the wiggles.
Floors and ceilings (support and resistance)
Often a price keeps bouncing up from a certain level, as if there is an invisible floor — buyers step in there. That floor is called support. Likewise, a price may keep getting pushed back down from a certain level, like an invisible ceiling where sellers appear. That ceiling is called resistance. These levels are not magic, but they show where the crowd has changed its mind before, which can be handy when timing a buy or sell.
A gentle warning
Charts are helpful, but they are not a crystal ball. A pretty rising line cannot promise the price will keep rising, and patterns that worked yesterday can fail tomorrow. Use a chart to understand where a price has been and to choose your timing — but base your real decision on whether the company underneath is genuinely strong. Price tells you the mood; the business tells you the value.