Reading a chart

Lesson two: reading a chart. Every trade idea, Bentley's included, comes down to a few prices on a chart. Once you can read one, you can check an idea for yourself instead of taking it on trust.

In lesson one, price was a single line. Most charts use candles instead. Each candle sums up one slice of time in four prices. Take one hour as an example. Bitcoin opens the hour at $60,000. It climbs as high as $60,800, drops as low as $59,700, and closes the hour at $60,500. The thick part, called the body, runs from the open to the close. The thin lines above and below are the wicks. They mark the hour's highest and lowest prices. This candle closed above its open, so it's green. A candle that closes below its open is red.

The shape of a candle matters too. Remember, price moves when one side is more impatient. A big body with tiny wicks means one side was in charge all the way. A long wick means one side pushed hard, and the other side pushed it back. A long wick on top says sellers rejected higher prices. A long wick underneath says buyers stepped in lower down. One candle proves very little, but wicks show where the fight was.

How much time each candle covers is called the timeframe. On a one-minute chart, every candle is one minute. On a four-hour chart, every candle is four hours. On a daily chart, one day. Same market, different zoom. One four-hour candle squeezes all the one-minute candles inside it, two hundred and forty of them, into just four prices. On most charting sites, the buttons along the top switch the timeframe. And every setup in Bentley's report names its timeframe. That tells you which chart to open.

So which timeframe should you read? Small timeframes are noisy. On a one-minute chart, one big order can paint a candle that looks like a crash, and a minute later it's gone. Four-hour and daily candles are built from far more trades, so a single order barely shows. Their trends and levels carry more weight, and more traders watch them. A simple habit: start on the daily chart for the big picture, plan on the four-hour, and only zoom in after that.

Now, trend. Prices move in waves. In an uptrend, each wave climbs past the last high, and each pullback stops above the last low. Higher highs and higher lows, like a staircase. A downtrend is the mirror image: lower highs and lower lows. When the highs and lows go nowhere, the market is moving sideways, in a range. A trend holds until that pattern breaks. In an uptrend, the clearest warning is price falling below the last higher low.

On any chart, you'll see prices where the market keeps turning. Support is a floor: an area where buyers stepped in before, so falls tend to stall. Resistance is a ceiling: sellers showed up there before, so rallies tend to stall. Notice I said area. Price rarely turns at the exact same dollar, so draw zones, not thin lines. Bentley's setups work the same way. Each one gives an entry zone, a range of prices. The more times price has turned at a zone, the more traders watch it. And when a zone finally breaks, it often swaps roles. Old resistance becomes new support.

Here's how it fits together. Say the daily chart shows higher highs and higher lows. On the four-hour, price has pulled back into a support zone that held twice before. That's a read: a reason to pay attention. It isn't a trade yet. Turning a read into a plan, with a stop and a size, comes in lessons five and six.

Let's recap. A candle shows four prices: the open, the high, the low and the close. The timeframe is the time each candle covers, and four-hour and daily charts carry more weight than one-minute ones. An uptrend makes higher highs and higher lows. Support and resistance are zones where price has turned before. On this lesson's page, try marking three of them on Bitcoin's four-hour chart. In the next lesson, you'll learn about leverage and liquidation. And remember, this course is education only, not financial advice.