Lesson 2: Charts 101
In this lesson, we look at how to read price without guessing. We ask why charts matter and how we can use them to inform our decisions. Charts are not predictions. They’re a record of behaviour. We love charts at FoundryStrat because they tell a story.
At FoundryStrat, we prefer to use something called candle stick charts. We'll get to that latter. Whether you use candles (shown in the picture) every candle, bar (another type of chart), or line is simply:
“This is where buyers and sellers agreed on price.”
If you learn to read charts properly, you stop asking “what do I think?”
and start asking “what is the market telling me?”
We like to use a software charting package called TradingView - you can access a discount link on our home page if it's something that you might find of use. Most of the charts you see on our website come from TradingView.
What a chart actually shows?
A price chart shows:
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Where price has been
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How fast it moved
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Where it struggled
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Where it was accepted or rejected
It does not tell you:
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What should happen next
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Whether a company is “good”
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Whether a trade will work
Charts describe reality. They don’t create it.
Chart types (keep it simple)
Line charts
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One price per period (usually the close)
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Clean, uncluttered
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Good for seeing big-picture trends
Downside: hides intraday behaviour.
Bar charts
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Show open, high, low, close
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More information than a line
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Less visual for beginners
Mostly used by old-school traders. It's what we first learned to interpret. It's very similar to the below candlestick
Candlestick charts
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Most common
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Visual representation of price behaviour
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Show:
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Direction
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Volatility
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Conviction or hesitation
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This is what we’ll mainly use at FoundryStrat. We like it because it's intuitive and easy to follow.
Summary of the Candle Stick - you'll pick this up quickly.
Timeframes (this is critical)
A chart only makes sense in context.
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5-minute chart → short-term - use for trading intra-day and not recommended for beginners.
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Daily chart → swing or position trading - this is where you can analyse a stock for a swing trade (1 week to multiple months)
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Weekly chart → structural trends can be seen from weekly charts and often used for investing because it cuts out a lot of price 'noise'.
Key rule:
Higher timeframes matter more than lower ones.
If the weekly trend is down, bullish 5-minute setups are fighting gravity so you must be aware what you are looking at from a timeframe perspective.
Trend, range, and chop
Almost all price action falls into one of three states:
We've taken three different examples of Microsoft from different periods to show the trends.
1. Trend
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Price makes higher highs and higher lows (uptrend)
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Or lower highs and lower lows (downtrend)
Trends are where money is made most easily. This trend pushes up Microsoft over 50% in 140 days. They can be very powerful. We'll delve into how you spot trends in later lessons.
2. Range
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Price moves sideways
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Buyers and sellers are balanced
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Breakouts matter, but most fail
Ranges frustrate people who trade too much but you can make money from ranges. It's possible to trade the range but it's not easy. What you want is trends, you can see the trends either side of the range. Often price moves up or down, then consolidates (forms a range) and then starts trending again as you see above.
3. Chop
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No clear structure
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Erratic moves
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Low-quality signals
Best action in chop: do nothing - look how messy the chart is - up, down, up down....trading this would just be guess work and you'll end up losing money.
Support and resistance lines
Support and resistance are not magic lines. They are areas where:
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Buyers previously stepped in
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Or sellers previously took control
Think of them as:
Zones of interest, not exact prices.
The more times a level is tested, the more attention it attracts, until it breaks.
Volume (when it matters)
Volume shows participation.
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Rising price + rising volume = conviction
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Rising price + falling volume = caution
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High volume at a level = decision point
Volume doesn’t predict direction, but it confirms importance.
What not to do
Avoid:
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Drawing lines everywhere
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Staring at tiny timeframes
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Adding indicators before understanding price
If price doesn’t make sense on its own, indicators won’t save you.
A simple chart-reading checklist
Before doing anything, ask:
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What timeframe am I trading or investing on?
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Is the market trending, ranging, or chopping?
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Where has price reacted before?
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Am I aligned with the bigger picture?
If you can’t answer those, don’t trade.
What’s next
Now that you can read structure, it’s time to understand the language inside each bar.
That means candlesticks — without the nonsense.
👉 Next lesson: Candlesticks – What price behaviour really looks like
