charts in technical analysis
TRANSCRIPT
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Charts in Technical Analysis
Aju Joy
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Points to remember
• Charting represents a key activity in technical analysis.
• It is the security prices that are charted• Prices are volatile• There are four prices:• High, low, closing and opening price• By far closing price is the most important,
because it is used in most of the analysis
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Types of charts
• Line chart• Bar chart• Japanese candlestick chart
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Line chart
• Simplest price chart• Closing prices are charted on the
graph in a daily basis.• Each closing price would be
represented by a point on the chart.
• All these points would be connected by a straight line which would indicate the trend of the market.
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1-month line chart of Exxon-Mobil Corporation.
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Bar chart
• Most popular chart used by analysts• In this chart the highest, lowest and the
closing prices are plotted on a day to day basis.
• A bar is formed by joining the highest and lowest price of a day by a vertical line.
• The top of the bar represents highest price• The bottom bar represents the lowest price• A small horizontal hash on the right hand side
is used to represent the closing price• And the opening stock is marked by a hash on
the left hand side.
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6-month bar chart of Citigroup using the arithmetic scale, where the gridlines are equally spaced and
represent the same price increments.
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