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Types of charts

 Line charts represents only the closing prices over a set period.
 The line chart is also called a close-only chart.
 formed by connecting the closing prices for each period over the timeframe.
 Chart doesn’t provide much insight into intraday price movements, many investors
consider the closing price to be more important than the open, high, or low price
within a given period.
 These charts also make it easier to spot trends since there’s less ‘noise’ happening
compared to other chart types.

Bar Chart

A bar chart displays all the four price variables namely open, high, low, and close. A bar has
three components.

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1. The central line – The top of the bar indicates the highest price the security has
reached. The bottom end of the bar indicates the lowest price for the same period.
2. The left mark/tick – indicates the open
3. The right mark/tick – indicates the close

If the opening price is lower than the closing price, the line is often shaded black to
represent a rising period. If the closing price is more than closing price its represented by a
red shade.

Candlestick Charts

Candlestick charts originated in Japan over 300 years ago. Like a bar chart, candlestick
charts have a thin vertical line showing the price range for a given period that’s shaded
different colours based on whether the stock ended higher or lower. The difference is a
wider bar or rectangle that represents the difference between the opening and closing
prices. Falling periods will typically have a red or black candlestick body, while rising periods
will have a white or clear candlestick body. Days where the open and closing prices are the
same will not have any wide body or rectangle at all.

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Point and Figure Charts

Point and figure charts are characterized by a series of Xs and Os. The Xs represent upward
price trends and the Os represent downward price trends. There are also numbers and
letters in the chart that represent months and given investors a rough idea of dates.

Types of trend

Sideways Trend

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When the stock trades in a range, it is called sideways trend. Sideways trend occurs when the
force of demand & supply are nearly equal. A sideways trend is also called ‘horizontal trend

UP Trend

When a particular stock is making higher highs & higher lows, that stock is considered to be
in uptrend. Higher highs indicate that the stock is making consecutive peaks than previous
highs. Higher lows indicate that bottom is higher than the previous lows.

Down Trend

When a particular stock price is falling continuously it is considered as downward trend

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Support and Resistance

The best way to identify the target price is to identify the support and the resistance points.
The support and resistance are specific price points on a chart which are expected to attract
maximum amount of either buying or selling. The support price is a price at which one can
expect more buyers than sellers. Likewise the resistance price is a price at which one can
expect more sellers than buyers. The resistance level is always above the current market
price.

Volume

Volume plays a very integral role in technical analysis as it helps us to confirm trends and
patterns. Volumes indicate how many shares are bought and sold over a given period of
time. Volume and share price are directly proportional due to the influence of demand and
supply. Analysing volume helps to find

 Identifying Momentum
 Low Activity

Moving Averages

The moving average can be used to identify buying and selling opportunities with its own
merit. When the stock price trades above its average price, it means the traders are willing
to buy the stock at a price higher than its average price. This means the traders are
optimistic about the stock price going higher. Therefore one should look at buying
opportunities.

The Simple Moving Average is arguably the most popular technical analysis tool used by
traders. The Simple Moving Average (SMA) is often used to identify trend direction, but can
be used to generate potential buy and sell signals. The SMA is an average, or the mean

Uses of Moving Average

 Trend identification
 Identify double crossovers
 Price crossovers
 Support and Resistance

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Chart Patterns

Head and Shoulders

 Top (1) corresponds to the first shoulder of the pattern.

 Top (2) is the “head” of the pattern.
 Top (3) corresponds to the second shoulder of the pattern.

The left shoulder is formed at the end of an extensive move during which volume is
noticeably high. After the peak of the left shoulder is formed, there is a subsequent reaction
and prices slide down to a certain extent which generally occurs on low volume. The prices
rally up to form the head with normal or heavy volume and subsequent reaction downward
is accompanied with lesser volume. The right shoulder is formed when prices move up again
but remain below the central peak called the Head and fall down nearly equal to the first
valley between the left shoulder and the head or at least below the peak of the left
shoulder. Volume is lesser in the right shoulder formation compared to the left shoulder
and the head formation. A neckline is drawn across the bottoms of the left shoulder, the
head and the right shoulder.

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Inverted Head and Shoulders Pattern

The Head and Shoulders pattern has its bullish equivalent. This is the inverted Head and
Shoulders pattern. Contrary to the Head & Shoulders pattern, the inverse Head & Shoulders
pattern appears during a bearish trend and it implies that the existing bearish tendency is
likely to be reversed.

Triangles
Symmetrical triangle pattern

The pattern contains at least two lower highs and two higher lows. When these points are
connected, the lines converge as they are extended and the symmetrical triangle takes
shape.

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Ascending triangle chart pattern

The ascending triangle is a bullish formation that usually forms during an uptrend as a
continuation pattern

Descending Triangle

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The descending triangle is a bearish formation that usually forms during a

downtrend as a continuation pattern.

Reference
https://www.investopedia.com/university/technical/techanalysis4.asp
https://www.investopedia.com/university/charts/
https://www.investopedia.com/terms/v/volume.asp