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Types of charts in Technical Analysis study

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Posted by : NIFM
11 August, 2013, 12:32 PM
Technical Analysis on stocks and commodities is based on chart analysis. Charts are made through history data of price and volume of securities. Different types of charts available for study of technical analysis are: Line Chart Bar Chart Candlestick Chart Line Charts: Line charts are the lines which moves across the chart connecting the closing price of a specific stock or market over a given period of time. This type of chart is particularly useful for providing a clear visual illustration of the trend of a stock’s price or a market’s movement.   Bar Charts: Bar charts are the most popular charting method in different industries. The high, low and close are required to form the price plot for each period of a bar chart. The high and low are represented by the top and bottom of the vertical bar and the close is the short horizontal line crossing the vertical bar. On a daily chart, each bar represents the high, low and close for a particular day. Weekly charts would have a bar for each week based on Friday's close and the high and low for that week. but bar charts are not popular in technical analysis study. Hence Bar charts show the high and low price for each day, perhaps with a tick for the closing price.   Candlestick charts: Candlestick charts are originated in Japan over 300 years ago, candlestick charts have become quite popular in recent years. For a candlestick chart, the open, high, low and close are all required. A daily candlestick is based on the open price, the intraday high and low, and the close. A weekly candlestick is based on Monday's open, the weekly high-low range and Friday's close. Many traders and investors believe that candlestick charts are easy to read, especially the relationship between the open and the close. White (clear) candlesticks form when the close is higher than the open and black (solid) candlesticks form when the close is lower than the open. The white and black portion formed from the open and close is called the body (white body or black body). The lines above and below are called shadows and represent the high and low.  

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