CHART READING GUIDE

Candlesticks, patterns, volume, and indicators — all connected to the Setup Gate. Every chart concept here maps directly to a gate you run before entering a trade.

Section 01

Candlesticks

Each candle shows 4 data points: open, high, low, close. The body shows the open-to-close range. The wicks show how far price moved beyond that range. Together they tell you who was in control — buyers or sellers — and how decisively.

Gate 2 — Structure: You read candlesticks to confirm clean support and resistance. A hammer at support is Gate 2 evidence. A marubozu breaking a level is Gate 2 confirmation. A doji at resistance is Gate 2 warning — strength may be fading.

BULLISH

Bullish Candle

Close above open. Green body. The bigger the body relative to wicks, the stronger the buying pressure was all day.

  • Buyers in control

BEARISH

Bearish Candle

Close below open. Red body. Sellers dominated the full session. The larger the body, the more decisive the selling pressure.

  • Sellers in control

DOJI

Doji

Open equals close. Equal wicks. The market is tired — neither side won. Context matters: doji at resistance = warning. Doji at support = possible reversal.

  • Indecision — read context

HAMMER

Hammer

Long lower wick (2× body minimum). Stock sold off hard during the day, but buyers stepped in and pushed it back up. Classic reversal signal at support.

  • Reversal at support

MARUBOZU

Marubozu

No wicks. All body. Buyers dominated from open to close with no hesitation. The NVTS problem: multiple bullish marubozus in a row signal extended conditions — do not chase.

  • Explosive strength — check NVTS guard

SHOOTING STAR

Shooting Star

Long upper wick. Stock rallied hard intraday then sold off to close near the lows. Rejection of higher prices — often the first warning that a trend is losing momentum.

  • Rejection at resistance

ENGULFING

Bullish Engulfing

Today's green candle fully wraps yesterday's red candle. Buyers overwhelmed sellers completely. Strong reversal signal — especially meaningful at support on above-average volume.

  • Strong reversal signal

INSIDE BAR

Inside Bar / NR7

Today's range is fully inside yesterday's range. Price is contracting — energy is coiling. A breakout above the outer candle high = Gate 2 confirmation of a new move beginning.

  • Coil setup — watch for breakout

Section 02

Volume Analysis

Volume is the weight of evidence behind price. A breakout on low volume is suspicious. The same breakout on 3× average volume is confirmed. Scanner A scores volume buildup — Gate 1 requires 500K+ average daily volume as the liquidity floor.

Gate 1 — Liquidity: Volume serves two purposes in the gate. First, average daily volume above 500K ensures you can get in and out without slippage. Second, volume on the breakout candle (ideally 2-3× average) confirms institutional buying, not retail noise.

Volume Contraction

  • Volume declining over 5+ consecutive days during a base or pullback.
  • This is the setup you want to see BEFORE a breakout.

Volume Expansion

  • Volume 2-3× above average on the breakout candle. This is the confirmation signal.

Climax Volume

  • Volume 5-10× average on a single candle, usually after a big run. This is exhaustion, not continuation.

Volume on Pullback

  • Volume declining as price pulls back = healthy.
  • Good: low volume on down days, high volume on up days.

Relative Volume (RVOL)

  • Today's volume divided by the 20-day average.

Volume at Support

If volume spikes on a down day TO support, that can be buyers stepping in aggressively.

Section 03

Chart Patterns

Patterns are compressed investor psychology. Understanding the psychology behind the shape helps you read new patterns you've never seen before.

Gate 5 — Thesis: Identifying the pattern gives you your one-sentence thesis.

The Coil / Base Breakout

Stock consolidates in a tightening range for 7-21 days. Then: one large candle breaks the range on 2-3× average volume.

Trend Pullback to EMA

Stock in established uptrend. Pulls back 7-20% on declining volume — weak hands selling. Holds the EMA20 or EMA50.

Flag / Channel Pullback

After a sharp move up, price consolidates in a slightly downward-sloping channel.

Head & Shoulders Top

Three peaks — middle peak (head) is highest. When price breaks the neckline after the right shoulder, the trend reversal is confirmed.

Section 04

Key Indicators

Scanner A uses EMA 9/21/50, RSI, Bollinger Bands, and MACD to build the 10-component score.

EMA 9 / 21 / 50

Smooths price over time, weighting recent candles more heavily.

RSI

Measures momentum on a 0-100 scale. Not a buy/sell signal in isolation — it confirms momentum quality.

  • Buy zone: RSI 45-68 on a breakout or pullback entry.

BB Width

Bollinger Bands are standard deviation envelopes around the 20-day MA. When bands narrow, price is coiling. When they expand on a move, the breakout is beginning.

MACD

Measures the spread between EMA12 and EMA26. When MACD crosses above its signal line — momentum is building.

Section 05

Quick Reference Cheat Sheet

Chart Signals — Buy / Skip / Wait

BUY SIGNALS (need 4+ of these)

  • EMA 9 > 21 > 50 — full bull stack
  • RSI 45-68 on entry day

HARD SKIP (any one = no trade)

  • RSI above 75 — Scanner A forces score to 0
  • 5-day gain above 18% — NVTS guard fires

WAIT / WATCH (setup not ready yet)

  • RSI 68-75 — extended but not failed
  • BB width still wide — coil not formed

Section 06

Chart Reading Quiz

Question 1 of 3

A stock shows: RSI 52, EMA9 above EMA21 above EMA50, 5-day gain of 4%, BB width at 3-month low, today's volume 2.8× average on a green breakout candle. Scanner A score: 84. What do you do?

  • Correct answer: B.

Question 2 of 3

An energy stock gapped up 8% today. Prior 5-day gain was 22% before the gap. Volume is 6× average. RSI is 79. Correct answer: C.

Question 3 of 3

The Regime Scorer shows 42 — NEUTRAL. What is your R:R and what do you do?

  • Correct answer: B or C.