Level 4 · Lesson 14 of 16 · 6 min read
5-Step Chart Analysis Workflow
How to analyze any chart in 5 minutes, step by step.
Researched and written by Laurent The top-down reality: A trader looking only at the 5-minute chart is like someone navigating a city by staring at the sidewalk. You need to look up (weekly chart = the map) before you look down (5-minute chart = the sidewalk).
The 5-Step Chart Analysis Framework
Random chart staring is not analysis. This 5-step process keeps you structured and prevents emotion-driven decisions.
1
Identify the Trend (Weekly + Daily)
Is price making HH/HL (uptrend), LH/LL (downtrend), or oscillating (range)? Write it down: "EUR/USD: Daily uptrend, Weekly uptrend."
2
Mark Key Levels (Daily + H4)
Draw the 2-3 most obvious support and resistance levels. Don't draw everything: only the levels where price has clearly reacted multiple times.
3
Look for a Pattern (H4 + H1)
Is price forming a continuation pattern (flag, triangle) or a reversal pattern (head and shoulders, engulfing) at a key level? Or is it just trending cleanly?
4
Define the Setup (H1)
If a pattern exists at a key level in the trend direction: where would you enter? Where is the stop? Where is the target? What is the R:R? (The risk-reward ratio: how much you stand to gain per unit risked. A 1:2 R:R means the target is twice the stop distance.)
5
Decide: Trade or Pass
Does the setup meet your criteria? Is R:R at least 1:2? Is the trend aligned? Is there clear confirmation? If yes: execute. If any answer is no or "maybe": pass and look for the next setup.
The Most Common Analysis Mistake
Analysis paralysis: drawing 20 indicators, 15 trend lines, 8 Fibonacci grids, and then being unable to make a decision. The more tools you add, the more confusing conflicting signals become.
Start with:
- Candlestick chart (no indicators)
- 2-3 S/R levels
- One trend line or channel if applicable
Master these first. Indicators come in Level 5. Chart patterns and price action alone are enough to develop a complete trading approach.
If you can't explain the trade in one sentence, don't take it. "EUR/USD daily uptrend, pullback to support at 1.0850, bullish engulfing, buying with stop below 1.0820 targeting 1.1050" = clear. If your analysis requires three paragraphs of if/then logic, the setup isn't there.
Key Takeaways
- • Always start with the highest timeframe and work down. Never start with the 1-minute chart.
- • Identify trend, then key levels, then patterns, then entry setup. In that order.
- • Never analyze more than 3-4 pairs at a time. Depth beats breadth.
- • Write down your analysis before looking for an entry. It keeps you honest.