How to Chart Stock Movements with Candlestick Charts

Choose a stock to chart. For this exercise, we're just going to make one candlestick, so you only need the closing information for one day's trading for one stock. The chart shows the historical price data for Satyam Computers for May 18, 2009. You'll need the opening price, closing price, high and low for the day.
On a piece of graph paper, label the vertical axis with numbers from the lowest price of the day to the highest price of the day.Ex. The stock we're charting hit a high of 2.20 and a low of 2.00, so the vertical is labeled along the vertical from 2.00 to 2.20.
Determine whether the stock closed higher or lower than it opened. If the opening price is higher than the closing price, you'll use a red marker. If the opening price is lower than the closing price, you'll use a blue marker. If the stock opened and closed at the same price, you'll use a black marker. Using the right color marker, place a dot at the low price for the day.
Place a second blue dot at the high price for the day. Connect the two dots with a thin line. This is the 'wick' of the candle.
Find the opening price for the day and mark a horizontal line across the wick at that point. Do the same with the closing price.
Draw a thick blue line between the two horizontal marks to create the candle body. That's the complete candlestick.
Take some time to get familiar with the anatomy of the candlestick you just drew. There's a lot more information in that little symbol than you think. The color tells you whether the stock traded up or down over the course of the day. The length of the entire candle from wick top to wick bottom tells you the entire range of trading for the day. The length of the body tells you how much the stock moved from the starting bell to the closing bell. The length of the wick on either end can suggest the tenor of the market trading. For instance, a long top wick on a short candle body suggests a bullish push that was rejected by traders, while a long top wick on a long candle body suggests that the market pushed back against a bullish rise but couldn't force prices back down to the opening price.

How to Learn Stock Market Charts

Locate the stock symbols of the companies you are investigating. Knowing the location of the stock symbol (normally on the top left hand corner of a stock chart) will allow you to quickly identify the stock with which you are dealing. Familiarize yourself with all of the symbols which are a part of your stock portfolio by committing them to memory, or simply have them printed out and placed in an area where they can easily be seen.
Read the high and low price points of the stock. Understanding the high and low price of your stock is crucial when it comes to reading stock charts. Viewing the high and low of the stock will let you see the highest price that stock reached, and the lowest price which the stock reached over a given period of time. Most online charts give the option to show different periods of time, from one day to a year or more.
Find the moving average. A moving average tracks the movement of the stock during a particular time frame. Comprehend that you can track the movement of a stock chart over a 30 or 90 day time frame.
Determine the stock volume. Volume simply means the number of people that were trading the stock on any given day. The volume is usually found beneath the price graph. Track the volume in days, months or weeks by referring to the dates on the chart. A high volume indicates a lot of transactions taking place on that day, which usually moves the stock significantly up or down.
Analyze trends. Know that when the price of a stock market chart is trending in an upward direction, the price is likely to go higher due to trading momentum. Similarly, stocks that are moving in a downward direction will tend to keep moving in that direction. Observe which direction the stock chart you are reading is moving. If the price is moving toward the top right corner of the chart, the stock is trending up. If the stock price is moving in the direction of the lower right corner of the chart, the stock is trending in a downward direction.
Understand support and resistance levels. Support refers to the lowest point a stock has a tendency to reach and then rebound in an upward direction. Resistance is the point a stock will normally reach and then seem to bounce off that price level and move in a downward direction.