Important Reminder
This checklist helps you read the market, not predict it. No analysis method guarantees profits. Always practice with demo accounts first. Never trade with money you cannot afford to lose.
What You'll Master in This Lesson
- Follow a systematic 7-step checklist to analyze any chart with confidence
- Identify trend direction using EMAs and understand when to trade or wait
- Mark key support and resistance levels for trade planning
- Check momentum with RSI and MACD to time entries better
- Confirm moves with volume to avoid false breakouts
- Create a complete trade plan with entry, exit, and invalidation levels
Introduction: Your Trading Checklist
Welcome to Lesson 5.3! You've come a long way. You've set up your TradingView account, learned how to read candlesticks, added all five essential indicators, and now you have a fully equipped trading workspace.
But here's the question: What do you actually do with all these tools?
When you open your chart and see price moving, EMAs crossing, RSI climbing, MACD flashing signals, and volume bars changing—how do you make sense of it all? Where do you even start?
That's what this lesson is about. We're going to give you a simple, step-by-step checklist that you can follow every single time you analyze a chart. Think of it like a pilot's pre-flight checklist. Before a pilot takes off, they go through a list: fuel level, engine status, instruments working, communication clear. They don't skip steps. They don't guess. They follow the checklist every time because it keeps them safe and prepared.
Your trading checklist works the same way. It keeps you disciplined. It prevents you from making emotional decisions. And most importantly, it helps you see what's really happening in the market instead of what you hope is happening.
The 7-Step Beginner Checklist
This checklist is your framework for reading any chart. Use it every time before considering a paper trade.
Identify Market & Timeframe
Know exactly what you're analyzing and at what scale.
Check the Trend (EMAs)
Determine if buyers or sellers are in control using moving averages.
Mark Support & Resistance
Identify key price levels where the market has reversed before.
Check RSI (Momentum)
See if the market is overbought, oversold, or healthy.
Check MACD (Shifts)
Look for momentum crossovers and trend changes.
Check Volume
Confirm price moves have real participation behind them.
Make a Plan
Define entry, exit, invalidation, and journal your reasoning.
Step 1: Identify the Market and Timeframe
This might seem obvious, but it's important to state it clearly every time you analyze a chart. Before you look at indicators or price action, answer two simple questions:
Is it EURUSD (forex)? BTCUSDT (crypto)? GBPJPY? ETHUSD? Say it out loud or write it down.
Am I looking at the 1-hour (1H) chart? The daily (D) chart? The 4-hour chart?
Why This Matters
Different markets and timeframes behave differently:
- Crypto is more volatile than forex. Bitcoin can move 5% in a day, while EURUSD might move 0.5%. This affects your risk management and expectations.
- Lower timeframes are noisier and faster. What looks like a strong trend on a 1-hour chart might just be a small blip on the daily chart.
By clearly stating your market and timeframe at the start, you set the context for everything else. You remind yourself that you're analyzing a specific slice of the market at a specific scale.
Examples
"I'm looking at BTCUSDT on the 1-hour chart."
"I'm analyzing EURUSD on the daily chart."
Step 2: Check the Trend Using EMAs
The trend is the single most important thing to understand when analyzing a chart. As the old trading saying goes: "The trend is your friend." Trading against the trend is like swimming against the current—it's exhausting, risky, and usually leads to losses.
So the first real question you need to answer is: What is the trend right now?
How to Identify Trend Using EMAs
Uptrend
- ✓ Price above both EMA 50 & 200
- ✓ EMA 50 above EMA 200
- ✓ Both EMAs sloping upward
- Buyers in control
Downtrend
- ✓ Price below both EMA 50 & 200
- ✓ EMA 50 below EMA 200
- ✓ Both EMAs sloping downward
- Sellers in control
Neutral/Choppy
- ✓ Price bouncing between EMAs
- ✓ EMAs flat or tangled
- ✓ No clear direction
- Consolidation - Wait it out
Why This Matters
Knowing the trend helps you avoid fighting the market. If the trend is up, you're looking for dips to buy. If the trend is down, you're looking for rallies to sell (or you just stay out). If there's no trend, you wait. This simple step alone can save you from countless losing trades.
Example Statements
"Price is above both EMA 50 and EMA 200, and EMA 50 is above EMA 200. This is a short-term uptrend."
"Price is below both EMAs, and EMA 50 is below EMA 200. This is a downtrend. I will wait for an uptrend or skip this market."
Step 3: Identify Key Support and Resistance Levels
After you've identified the trend, the next step is to mark the important price levels on your chart. These levels act like floors and ceilings—places where buyers and sellers have fought hard in the past.
What is Support and Resistance?
Support (Floor)
A price level where buyers have stepped in before and pushed the price up. It's like a floor that holds the price from falling further. When price approaches support, traders expect buyers to show up again.
Resistance (Ceiling)
A price level where sellers have stepped in before and pushed the price down. It's like a ceiling that prevents the price from rising further. When price approaches resistance, traders expect sellers to show up again.
How to Find Support and Resistance
Look at your chart and identify recent swing highs (peaks) and swing lows (valleys):
- A swing low is a point where price went down, touched a level, and then bounced back up. That's support.
- A swing high is a point where price went up, touched a level, and then fell back down. That's resistance.
Pro Tip: Zones, Not Exact Prices
You don't need to be perfect with these levels. You're looking for zones, not exact prices. If you see that price bounced three times around 1.0800 on EURUSD, that's a support zone around 1.0800. It doesn't have to be exactly 1.0800 every time.
Why This Matters
Support and resistance levels help you plan your trades. In an uptrend, you want to look for buying opportunities near support. In a downtrend, you might look for selling opportunities near resistance.
These levels also help you set your stop loss (invalidation level). If price breaks below support, your idea is wrong, and you should exit.
Examples
"The last swing low is at 1.0800 on EURUSD. That's my nearest support level."
"Price hit $44,500 three times and got rejected each time. That's a strong resistance level."
Step 4: Check RSI (14) for Momentum
Now that you know the trend and the key levels, it's time to check momentum. Is the market moving with strength, or is it running out of steam? That's what RSI tells you.
Reading RSI in Context
RSI between 50–70: Healthy. Momentum is positive, but the market isn't overheated. This is the sweet spot for looking at buy opportunities.
RSI above 70: Overbought. The price has risen quickly, and a pullback may be coming. Be cautious. Don't chase.
RSI between 30–50: Typical for downtrends. Momentum is negative, sellers in control.
RSI below 30: Oversold. The price has fallen quickly, and a bounce may be coming. Be cautious if shorting.
Important Reminder
RSI above 70 or below 30 is not an automatic signal. It's a warning to pay attention. In a strong uptrend, RSI can stay above 70 for days or weeks. In a strong downtrend, RSI can stay below 30 as the market keeps falling. This is why you always check RSI in context with the other tools. Don't make decisions based on RSI alone.
Why This Matters
RSI helps you avoid entering at a bad time. If the trend is up but RSI is already at 80, you might want to wait for a pullback before entering. If the trend is up and RSI is at 55 and rising, that's a much better time to consider a buy.
Examples
"RSI is at 62, rising. Momentum is building in the uptrend, and we're not yet overbought. This is healthy."
"RSI is at 78, deep in the overbought zone. I will wait for a pullback before considering an entry."
Step 5: Check MACD (12-26-9) for Momentum Shifts
MACD helps you see if momentum is building or fading, and it alerts you to potential trend changes through crossovers.
What to Look For
Bullish Signals
- MACD line above signal line: Upward momentum present
- Histogram expanding upward: Momentum increasing
- Bullish crossover: MACD crosses above signal line—buy signal in uptrend
Bearish Signals
- MACD line below signal line: Downward momentum present
- Histogram shrinking or expanding downward: Momentum weakening or bearish
- Bearish crossover: MACD crosses below signal line—sell signal in downtrend
Why This Matters
MACD helps you see if momentum is building or fading. A bullish crossover in an uptrend adds confidence to a buy idea. A bearish crossover in an uptrend is a warning—momentum might be shifting, and you should be cautious.
MACD can also help you avoid entering too late. If you see a bullish crossover that happened days ago and the histogram is already starting to shrink, the momentum burst might be over. Wait for the next setup.
Examples
"MACD line is above the signal line, and the histogram is expanding. Bullish momentum is strong."
"MACD just had a bearish crossover. The uptrend might be losing steam. I will wait before entering."
Step 6: Check Volume for Confirmation
Volume is often the forgotten tool, but it's one of the most important. It tells you if there's real participation behind a price move, or if it's just noise.
How to Read Volume
Compare the current or recent volume bars to the average volume over the past 20–30 bars. Ask yourself: Is volume higher or lower than usual?
The Key Principle
Breakouts or moves with high volume are more likely to continue. Many traders believe in the move. Strong participation = Real breakout.
Breakouts with low volume are risky. Weak participation often leads to reversals. This is called a false breakout.
Why This Matters
Volume is like the fuel behind price movement. A rally without volume is like a car running on empty—it won't get far. A breakout with strong volume is like a rocket launching—it has the power to continue.
Always check volume before making a decision.
Examples
"Price broke above resistance, and volume is 2x higher than the recent average. This looks like a real breakout."
"Price is rising, but volume is lower than average. I'm skeptical. I will wait for confirmation."
Step 7: Make a Plan (If Paper Trading)
This is the final step, and it's where everything comes together. You've analyzed the trend, identified key levels, checked momentum with RSI and MACD, and confirmed participation with volume. Now, if you were going to take a paper trade (remember: always practice with fake money first), what would your plan be?
Your Plan Should Include Four Key Elements:
1. Entry Idea
Where would you enter the trade? At current price? On a pullback to support? On a breakout above resistance? Be specific. Write down a price or zone.
Example: "Enter at 1.0850 (current price near support)."
2. Invalidation (Stop Loss)
What price would prove your idea wrong? This is your stop loss. If price breaks that level, the trade idea is invalidated and you exit to protect capital.
Example: "Invalidate below 1.0800 (below support and EMA 50)."
3. Exit Idea (Take Profit)
Where might you take profit? This is usually the next resistance level, or a zone where you expect sellers to step in.
Example: "Target 1.0950 (next resistance level)."
4. Journal Note
Why are you taking this trade? Write down your reasoning. Reference the checklist. This helps you learn.
Example: "Uptrend on EMAs, RSI 62 and healthy, MACD bullish crossover, volume confirms breakout."
Why This Matters
A plan keeps you disciplined. It stops you from making emotional decisions mid-trade. It prevents you from moving your stop loss when you're scared or taking profit too early when you're excited. A plan also helps you improve. When you keep a trading journal with all your plans and results, patterns will emerge.
Putting the Checklist Into Action
Let's apply the 7-step checklist to BTCUSDT on the 1-hour chart so you can see how it all comes together.
Market & Timeframe
BTCUSDT, 1H chart
We're analyzing Bitcoin vs Tether (USDT) on the 1-hour timeframe. Each candle represents 1 hour of price action.
Trend (EMAs)
Price is above both EMA 50 and EMA 200. EMA 50 is above EMA 200.
Support/Resistance
Looking at recent price action:
- Recent swing low at $42,000 (support)
- Recent swing high at $44,500 (resistance)
RSI
RSI is at 58, rising. It's not overbought yet (not above 70).
MACD
MACD line is above the signal line. Histogram is expanding upward.
Volume
Recent candles show volume slightly above average. Not explosive, but steady.
Plan
If I were paper trading:
- Entry: $43,000 (current price area, in the middle of the uptrend)
- Invalidation: Close below $42,000 (below support and EMA 50—would break the uptrend)
- Target: $44,500 (resistance level where sellers may step in)
- Reason: Uptrend on EMAs, RSI healthy at 58, MACD bullish with expanding histogram, volume moderate, support at $42,000
Key Takeaways
Common Mistakes to Avoid
The checklist helps you read the market, but it's not a set of rigid rules. Sometimes you'll see 6 out of 7 items line up, and that's still a good setup. Don't be so strict that you miss opportunities. Stay flexible and use your judgment.
Writing down your reasoning might feel boring or unnecessary, but it's one of the most powerful learning tools you have. It helps you spot patterns in your mistakes and wins. Don't skip this step.
Perfect setups are rare. Sometimes 4 or 5 out of 7 checklist items is good enough, depending on your risk tolerance and experience level. As a beginner, aim for 5–6 out of 7. As you gain experience, you'll learn which items matter most.
Always know the price that proves your idea wrong. This is not optional. If you don't have an invalidation level, you don't have a plan, and you're just gambling. Every trade needs a clear exit point for when you're wrong.
The checklist is only useful if you use it consistently. Every single time you open a chart. Every single time you consider a trade. Make it a ritual. Over time, it will become second nature.
Practice Task (Hands-On)
Now it's your turn to practice! This is where the learning really happens.
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1
Open Your Chart Open EURUSD or BTCUSDT on the 1-hour or daily chart (whichever you prefer).
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2
Go Through the 7-Step Checklist Write down your answers for each step: Market & timeframe, trend, support/resistance, RSI, MACD, volume, and your plan.
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3
Take a Screenshot Take a screenshot of the chart and save it with your notes.
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4
Write a 2-Sentence Summary "The trend is ___, momentum is ___, and volume is ___. If I were trading, I would ___."
Example Summary
"The trend is up, momentum is building with RSI at 60 and MACD bullish, and volume is strong. If I were trading, I would look for a buy entry near $42,000 support with a target at $44,500."
This practice task should take about 20–25 minutes. Don't rush. Be thorough. The more you practice this checklist, the faster and more natural it will become.
What's Next?
Congratulations! You've completed Lesson 5.3. You now have a powerful, structured checklist for reading any chart. In Lesson 5.4, we're going to take the next step: paper trading. You'll learn how to place practice trades on TradingView using fake money and how to keep a trading journal. Remember: Trading is high risk. This is education only. Never trade with money you cannot afford to lose.