CHART
TYPES
Charting
is human psychology; all price activities taking place in the market can
be plotted on a chart and those charts depict the normal behavior of various
market participants. In other words charting is yet another medium for
analyzing human behavior, plotted on a chart. In order to analyze any
market, the history is usually plotted on a chart formation, so one can
see what the behavior and movement of the market is, for that, a number
of different methods are applied by different individuals. The basic motive
or objective for plotting any chart is to identify a trend.
BAR
CHART
Bar analysis shows the open, high, low and closing price data for each
interval. A vertical line joins the high and low values, a dash to the
left indicates the open and a dash to the right indicates the close. If
the high and low are at the same price a ` – ` is displayed.
LINE
CHART
Line Chart simply plots a single value such as closing for a time interval.
The analysis can be presented visually in a number of different ways:
a continuous line which is angled, steeped or splinted; a series of individual
points; a vertical line for each interval (forest) or a vertical bar for
each interval (histogram).
CANDLESTICK
CHARTS
In the 1600 AD the Japanese developed a method of technical analysis to
analyze the price of rice contracts. This technique is called candlestick
charting. Candlestick charts display the open, high, low and closing prices
in a format similar to a bar chart, in a manner that extenuates the relationship
between the opening and closing prices. Candlestick charts are simply
a new way of looking at prices. They do not involve any calculation.
POINT
AND FIGURE CHARTS
High/Low Point and Figure are basically the same as Point and Figure analysis
except that High/Low point and Figure analysis are based on high and low
prices instead of closing prices. The common uses of Point and Figure
analysis are to:
Identify trends
Identify support and resistance areas
Generate buy and sell signals
