Chart settings and timeframes
A chart never shows price as it arrives, it summarises price into the period you picked. MetaTrader 5 draws the same symbol on twenty one periods, from M1 through the minute and hourly steps to daily, weekly and monthly. You switch periods from the Timeframes toolbar, opened under View, Toolbars, or from the timeframe list in the Charts menu. The choice decides what a single candle collects. Five hundred M15 candles cover 7,500 minutes, roughly five trading days; the same five hundred candles on H4 cover 2,000 hours, more than sixteen weeks of market time. A move that looks like dozens of swings on one chart stays inside a single body on the other.
Settings shape the reading as much as the period does. The Properties window, opened with F8, holds the chart type, the colour scheme, the grid, the period separators and the fixed scale. Under Tools, Options, Charts, the max bars in chart value decides how far back your history reaches; left low, levels from months ago never make it onto the screen.
The chart draws the bid by default. Buy orders fill at the ask, the gap between the two is the spread you pay, and the same Properties window can show the ask line so you watch that gap. The spread and contract size for your symbol sit in the symbol specification, opened by right clicking the symbol in Market Watch. Open one symbol on M15, count the candles on screen, then switch to H4 and see how many candles cover that same calendar day.
Reading a candlestick chart
A candle packs the four prices formed during your chosen period into one shape: open, high, low and close. The body spans open to close, the wicks mark the extremes that were touched but not held. Take an hourly EURUSD candle that opens at 1.08400, reaches 1.08750, drops to 1.08350 and closes at 1.08700. The body is 30 pips, the upper wick 5 pips, the lower wick 5 pips. It says buyers finished the hour ahead while the high could not be defended. The same range with a small body and long wicks would read as an hour where neither side held ground.
You do not have to guess these numbers by eye. In MetaTrader 5 press Ctrl+D for the Data Window and hover over a candle; the date, all four prices and the volume are listed, along with the value of every attached indicator on that bar. On forex symbols the volume shown counts price updates inside the period rather than traded size, so it measures activity.
A reading built on one candle is fragile. The same shape means something different in a quiet Asian session than in the first minute after a data release, where spreads can widen, wicks stretch and stop orders trigger at prices the body never reached. With the Data Window open, note the body and wick lengths of five consecutive candles in pips, then measure those same hours on M15 and count how many direction changes hid inside one hourly body.
Support, resistance and trend structure
Support and resistance are the zones where price previously stopped and turned. Orders gather there, though nothing makes them a hard boundary. Trend structure is the sequence those turns form. Highs and lows rising together read as an uptrend structure, falling together as a downtrend, overlapping as a range. Take a concrete series: a high at 1.0920, a low at 1.0860, a high at 1.0940, a low at 1.0885. Both the high and the low sit above the previous ones, so the structure is rising. When price closes below 1.0885 the sequence breaks and the same numbers invalidate the reading.
Measure distances instead of eyeballing them. In MetaTrader 5 the middle mouse button, or Ctrl+F, turns the cursor into a crosshair; drag from one point to another and it reports the bars crossed, the distance in points and the price you land on. Dragging from 1.0860 to 1.0940 shows 800 points on a five digit quote, which is 80 pips. That figure gives the size of the structure and the number that later feeds a stop distance and position size.
The better known a level is, the more orders gather around it, and price piercing a clean level by a few pips before coming back is common. Remember you are looking at the bid: buy orders fill at the ask, so a level above the market is one spread nearer than it looks. Mark the last three highs and three lows on one symbol, write the pip gaps between them, and find the close that broke the sequence.
Trend lines and channels
A trend line is a straight line joining consecutive lows or consecutive highs; two points define it and the third touch tests it. A channel is its parallel drawn on the opposite side, showing the band the move fits inside. In MetaTrader 5 you take Insert, Objects, Lines, Trendline, and for the band Insert, Objects, Channels, Equidistant Channel. The channel carries three anchors: two set the main line, the third sets how far the parallel sits from it.
Do not leave the line to your eye. Double click the object to select it, then press Ctrl+B for the Object List; every object stores the date and price of both anchors and you can correct them by hand. That makes a line reproducible: an anchor at 1.0812 on 12 March and another at 1.0864 on 27 March is 52 pips over fifteen days, a slope of roughly 3.5 pips a day. In the same properties window the right ray can be switched off so the line stops instead of running on.
Where the line falls depends entirely on the points you chose. Someone drawing from wicks and someone drawing from bodies get different slopes, resizing the window changes how steep it looks, and price can break structure without touching the line at all. A broken line is therefore not an event on its own; measure it against the sequence of highs and lows. Draw the same sequence twice on one chart, once from wicks and once from bodies, then compare the two sets of anchors in the Object List.
Patterns: flag, triangle, head and shoulders
These three names describe recurring shapes price draws. A flag is a narrow, usually counter sloping pause after a sharp move. A triangle is a range that narrows as highs fall and lows rise, and it has to end somewhere because a range cannot keep shrinking. Head and shoulders is a run of three peaks with the middle one highest, plus a neckline joining the two lows between them. All three name something that has already happened; none promises what comes next.
The measurable part of a pattern is arithmetic. If the pole of a flag ran from 1.0800 to 1.0900, that is 100 pips, and the pause breaks upward at 1.0870, the classic projection adds the same distance to the break and lands at 1.0970. That is a pencil measurement rather than a target, and price can turn before reaching it. On head and shoulders the measure is the distance from the top of the head to the neckline, and when the neckline is not horizontal two people arrive at two different numbers. In MetaTrader 5 you measure the pole in points by dragging the crosshair, then mark the projection with a horizontal line from Insert, Objects, Lines.
Hunting shapes has a price. Treating every vague squiggle as a pattern means paying the spread, and any commission, each time; your symbol's current spread is in the symbol specification in Market Watch. Scroll back through history, mark five instances of these three shapes, and count how many carried on the textbook way and how many fell apart mid pattern.
What moving averages tell you
A moving average tells you one thing: the average price of the last n bars and the direction that average is heading. With a simple average the sum is open to inspection. If the last five closes are 1.0840, 1.0850, 1.0860, 1.0855 and 1.0845, they total 5.4250, and divided by five that is 1.0850. When a new close arrives the oldest one drops out and the average shifts. An exponential average weights the newest close more heavily; on a 20 period exponential average that weight is 2 divided by 21, about 9.5 per cent. At the same period the exponential turns sooner and the simple one wobbles less.
In MetaTrader 5 you add it through Insert, Indicators, Trend, Moving Average. The dialog holds the period, the shift, the method (simple, exponential, smoothed, linear weighted) and the applied price. Switching the applied price from close to typical price moves the line without you changing anything else, which is why an average on someone else's screen may not match yours.
The cost of an average is delay. A 50 period simple average on H1 is the mean of the last fifty hours, and each new close makes up one fiftieth of it, 2 per cent. When direction changes the line turns bars after price does, and in a sideways range price crosses it again and again, because price circles its own short term mean. Put a 20 period simple and a 20 period exponential average on one chart and count how many bars apart they followed the last sharp turn.
Overbought and oversold with RSI
RSI divides the average of the up moves by the average of the down moves over a set number of bars, then squeezes the result between zero and one hundred. The sum is inspectable: over fourteen bars, an average gain of 0.0012 against an average loss of 0.0006 gives a ratio of 2, so RSI is 100 minus 100 divided by 3, or 66.7. With an average loss of 0.0004 the ratio is 3 and RSI 75. It measures that ratio and says nothing about price being expensive or cheap.
That is why overbought and oversold mislead. In a strong trend the down moves stay small, the ratio stays high, and RSI can hold above 70 for dozens of bars while price climbs. The same reading in a quiet range means something else. Trading the threshold alone means position after position against a strong move, and on a leveraged CFD such a position magnifies the loss at the same rate.
In MetaTrader 5 it sits under Insert, Indicators, Oscillators, Relative Strength Index, with a default period of 14, and the 30 and 70 lines are set on the Levels tab of its properties. Dropping the period from 14 to 7 speeds it up and pushes it into the thresholds far more often; running both periods on one chart shows how many signals come from the setting rather than the market. Find a stretch on one symbol where RSI held above 70 for at least ten bars, and compare the price at its start and end in pips.
MACD and momentum
MACD is the difference between two exponential averages, and the way that difference grows and shrinks is called momentum. On the defaults, the 26 period average is subtracted from the 12 period one and the signal is a 9 period average of that difference. In numbers: if the 12 period average on EURUSD is 1.08620 and the 26 period one is 1.08500, MACD is 0.00120, which is 12 pips; with the signal at 0.00090 the gap is 3 pips. Averages pulling apart mean the move is accelerating, averages converging mean it is slowing.
Two details matter in MetaTrader 5. The MACD under Insert, Indicators, Oscillators draws the main line as a histogram and the signal as a thin line, so those bars are not the difference between MACD and its signal. OsMA, in the same folder, plots that difference. The second is the signal parameter, labelled MACD SMA in the dialog and calculated as a simple average, where the classic definition uses an exponential one. Crossover recipes from other platforms do not map onto an MT5 screen for these reasons.
MACD is denominated in price. A reading of 0.0012 on EURUSD comes out at a different magnitude on gold or an index, so values cannot be compared across symbols. Move the settings away from 12, 26 and 9 and every past crossover shifts too; one chart tells two stories under two settings, and no measure declares either correct. Add MACD and OsMA to one chart and read the three values on the same bar in the Data Window.
Bollinger bands and volatility
Bollinger bands are two lines drawn around a moving average using the standard deviation of the same data. The default is a 20 period simple average and two standard deviations. In numbers: if the mean of the last 20 closes is 1.0850 with a standard deviation of 0.0025, the upper band sits at 1.0900, the lower at 1.0800, and the band is 100 pips wide. If deviation on that symbol falls to 0.0010, the bands move to 1.0870 and 1.0830 and the width drops to 40 pips. The bands measure how far the last 20 bars scattered around their own mean, not where price is going.
Touching a band adds nothing beyond that; it says price is two standard deviations from its own short term average. While a trend runs, price can walk along the upper band for bar after bar, and in a quiet range it crosses from one band to the other. In MetaTrader 5 the indicator lives under Insert, Indicators, Trend, with fields for period, shift and deviations, and raising deviations from 2 to 3 widens the bands at once.
Width translates straight into cost and risk. Surviving the same noise with a 100 pip band needs a far longer stop distance than with a 40 pip band, and a longer stop means a smaller position for the same money at risk. Measure the band width in pips at the start of a quiet session and again after a scheduled data release, and write the two numbers side by side.
Indicator lag and false signals
Every indicator is a function of past prices, so it turns after price does. The size of that delay can be worked out: on a 50 period simple average each new close is one fiftieth of the sum, 2 per cent, so the line usually needs more than a few bars to change direction. On a 20 period exponential average the newest close carries 2 divided by 21, about 9.5 per cent, and reacts sooner. The fast setting turns earlier and also produces more back and forth signals in a sideways market. The two are ends of one trade off.
False signals come with a bill. An indicator that flips direction three times in fifteen bars means three separate trades if it is followed literally, and each trade pays the spread, any commission, and a swap if the position is held overnight. Spread and swap values for your symbol are in the symbol specification, opened by right clicking the symbol in Market Watch. Whether a commission applies depends on the account type, and what you actually paid shows line by line in your account history in the client area.
There is also repainting: some custom indicators keep updating the forming bar until it closes, so a signal you saw live is gone from the history afterwards. Checking is simple. Pick one indicator, count the signals it produced over the last 100 bars, note how many were followed by five bars in the expected direction, then repeat the count with a slower period.
Timing entries across timeframes
Working across timeframes means looking at one symbol at two resolutions: reading structure on the higher period and timing on the lower one. The ratios are fixed, so one H4 candle contains four H1 candles and sixteen M15 candles. That is why a move that is one body on H4 splits into three or four swings on M15. Where the daily candle closes depends on the server clock, so daily candles do not line up exactly across two servers in different time zones.
The choice reaches into the stop distance and from there into position size. Suppose the structure is read on H4 where the last swing measures 60 pips, while on M15 it measures 15 pips. For someone risking 100 units of account currency per trade, a 60 pip stop works out at 100 divided by 60, about 1.67 units per pip. One standard lot of EURUSD is 100,000 units, and when the quote currency is the dollar a 0.0001 step is 10 dollars, so the position is 1.67 divided by 10, roughly 0.17 lots. The same risk with a 15 pip stop gives 0.67 lots. Contract size is listed in the symbol specification.
Cost weighs more heavily in proportion on the lower period. Taking a spread of 1 pip as an example, cost eats a fifteenth of a 15 pip move and a sixtieth of a 60 pip one. Open one symbol in an H4 and an M15 window, measure the same swing in pips on both, and work out the two lot figures yourself.
Telling a breakout from a false one
A breakout is price moving past a level and staying there; price moving past and coming back is called a false breakout. What separates them is not the touch but the close on the period you chose. Take a resistance at 1.0900. If an M15 candle reaches 1.0908 and closes at 1.0894, the level held on a closing basis, while a short position's stop placed at 1.0905 was triggered without a single close above it. A wick tells you price traded there, not that the level broke.
The price on the chart and the price your order fills at are also different. MetaTrader 5 draws the bid by default and buy orders fill at the ask, so a level above the market is one spread nearer than it looks. Turn on the ask line in the Properties window under F8 to watch that gap directly. You can follow how the spread behaves at session opens and around scheduled data from the bid and ask in Market Watch; most long wicks are that widening combined with the orders resting a few pips beyond well known levels.
On a leveraged CFD a false breakout can cost a closed position rather than a missed move. Defining terms in advance is what makes the difference: whether the level is a single price or a band a few pips wide, and which period's close you read. Mark one level, step through the next 20 candles, and count in two columns how many pierced it intrabar and how many actually closed beyond it.