CANDLE CHARTS
CANDLE CHARTS Learning objectives After studying this chapter the student should be able to understand: • Types of charts • The candlestick analysis • Pattern Psychology – investors’ psychology behind formation of candlestick pattern 2.1 The charts What is a chart? Charts are the working tools of technical analysts. They use charts to plot the price movements of a stock over specific time frames. It’s a graphical method of showing where stock prices have been in the past.A chart gives us a complete picture of a stock’s price history over a period of an hour, day, week, month or many years. It has an x-axis (horizontal) and a y-axis (vertical). Typically, the x-axis represents time; the y-axis represents price. By plotting a stock’s price over a period of time, we end up with a pictorial representation of any stock’s trading history.A chart can also depict the history of the volume of trading in a stock. That is, a chart can illustrate the number of shares that change hands over a...
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