Different Stock Chart Types Compared
| Stock Chart Type | Trading Charts | Chart Details | Usage | Popularity |
| Line Stock Charts | X | Low | Easy | High |
| High Low Close Bar (HLC) | X | Medium | Easy | High |
| Open High Low Close (OHLC) | ✔ | High | Easy | High |
| Japanese Candlestick | ✔ | High | Difficult | Medium |
How to read a stock chart?
How to Read a Stock Chart Basics Most stock charts depict the price of a stock in these basic ways: Line charts: This very simple type of chart shows the price of the stock at a given point during its trading day, typically the closing price, with a single point. Each price point is then connected to adjacent prices with lines.
What do the two red lines mean on a stock chart?
The two red lines show the “trading range”; this is the range between which the stock price fluctuates. The upper line is known as the Ceiling or the “Line Of Resistance,” and the lower the Floor or “Support.” Both lines show where the number of sellers equals that of buyers.
What are line charts and how do they work?
Line charts: This straightforward type of chart shows the price, as, you guessed it, a line, at any given point during its trading day, typically the closing price, with a single point. Each price point is connected to adjacent prices with lines.
What does the Blue Line on the chart mean?
It is usually depicted as a thin blue line which compares the stock’s price performance versus the S&P 500 index and is derived by dividing the stock price by the S&P 500 Index value. An upward sloping line means that the stock’s price is outperforming the S&P 500 Index.
What are the 3 lines on a stock chart?
Three Line Break charts show a series of vertical white and black lines; the white lines represent rising prices, while the black lines portray falling prices. Prices continue in the same direction until a reversal is warranted. A reversal occurs when the closing price exceeds the high or low of the prior two lines.
How do you use lines on a stock chart?
The general rule in technical analysis is that it takes two points to draw a trend line and the third point confirms the validity. The chart of Microsoft (MSFT) shows an uptrend line that has been touched 4 times. After the third touch in Nov-99, the trend line was considered a valid line of support.
How do you read a trend line?
Summarytrend lines are drawn at an angle and are used to determine a trend and help make trading decisions.in an uptrend, trend lines are drawn below the price and in a downtrend, trend lines are drawn above the price.to draw a trend line in an uptrend, two lows must be connected by a straight line.More items...
What does the trend line tell you?
Trendlines indicate the best fit of some data using a single line or curve. A single trendline can be applied to a chart to give a clearer picture of the trend. Trendlines can be applied to the highs and the lows to create a channel.
What is a support line in stock?
When trendlines connect price lows, this is called a support line. When the stock price begins to approach the line drawn at a prior low, you can expect demand to increase as buyers anticipate a bounce higher from that point. Momentum traders and investors looking to capitalize on a trending stock might consider buying stocks near these levels. However, if the stock price does not bounce off this line, and breaks the support line instead, this is considered a sign of weakness. Lack of interest from buyers at this level is a sign something is wrong and the stock may be headed lower.
What is a trendline on a chart called?
Drawing Trendlines. Trendlines that connect prior price highs or lows, straight across a chart, are referred to as horizontal support or resistance. Trendlines that have an upward or downward slope are called ascending or descending trendlines, respectively. Trendlines can vary in length and can be used across multiple timeframes.
What is a trend line?
Trendlines. Trendlines, also known as bounding lines, are lines drawn on a stock chart that connect two or more price points. Since stock prices tend to trend, trendlines that connect the highs or lows in the stock’s price history can help identify the current trend and predict what the stock price might do in the future.
What does RS line mean on sell side?
The RS Line is equally helpful on the sell-side. If it fails to make new highs as the stock price is making new highs, or generally begins to lag or trend lower, it’s a sign that the stock has lost its leadership position and selling should be considered.
What does it mean when a stock approaches its prior high?
When a stock approaches its prior high it creates an interesting psychological impact. Many investors will judge the stock as too expensive to purchase. However, if the stock is able to rise up through a resistance level on heavy volume, it should be looked at as a sign of strength.
Why is it important to understand stock charts?
Understanding how to read stock charts is an important part of technical analysis and has become virtually essential for any risk-taker looking to achieve long-term success in the financial markets. For traders, knowing how to interpret stock charts opens up various intraday and swing trading opportunities.
What is the yield of a stock?
Yield: A stock’s yield is the percentage of its price that is paid out as a dividend. For example, if a stock is priced at $100 per share and pays a quarterly dividend of $1 per share, then the annual yield on that stock would be $4, which represents a dividend yield of 4% of the $100 share price.
What is reverse stock split?
A reverse stock split is the reverse of a stock split. For example, a stock trading at $1 per share has a reverse 10 to 1 stock split. For every 10 shares owned, the stockholder would subsequently have 1 share at $10 per share.
Why do stocks split?
Stock splits generally occur when a stock has risen significantly enough to make the stock price too high for average investors to buy in round lots of 100 shares. The stock split makes the stock available to more investors and generally fuels more demand, often causing the stock price to gain after the split.
Do you have to take splits into account when reading stock charts?
Stock splits and reverse stock splits are generally adjusted for on a stock’s price chart on the day the split occurs. You do not have to take splits into account when reading stock charts produced by professional charting services or trading platforms.
Does Benzinga recommend investing in stocks?
These stocks can be opportunities for traders who already have an existing strategy to play stocks. Benzinga does not recommend trading or invest ing in low -priced stocks if you haven’t had at least a couple of years of experience in the stock market. For a full statement of our disclaimers, please click here.
What does it mean when a stock falls through the support line?
When the stock price falls through the support line, it means the trend has changed, and the new market impetus has affected the stock.
What is the trend line above the price called?
Notice that the trend line above the price is called resistance, and the trend line below price is called support . When price breaks up through resistance, it moves higher; this could potentially be a buy signal. When the price breaks down through the support trend line, it moves lower; this could possibly be a sell signal.
What is the closing price of a stock?
to 4 p.m. Eastern Time. During regular trading hours, the price will likely fluctuate. The “after hours” price is $125.15, reflecting the price the stock was currently being traded for outside of regular hours.
What does beta mean in stock market?
Beta shows how volatile a stock’s price is compared with the stock market, which may be an indicator of how risky the stock is. If beta is greater than one, the stock has historically been more volatile than the stock market (typically represented by either the S&P 500 or a total stock market index) for the specified period. If beta is less than one but greater than zero, it’s been less volatile than the overall market for that period. As always, though, past performance isn’t indicative of future performance.
What is the spread on a $124.65 ask?
If you see an ask of $124.65, sellers are currently selling for $124.65 per share. Note there’s a $0.04 difference between the two — this is called the bid-ask spread. Generally, when there’s high trading activity with lots of willing buyers and sellers, spreads will be smaller.
Do you get dividends if you buy stock before the ex-dividend date?
In order to receive the company’s dividend for the next period, you’ll have to become a shareholder (that is, buy its stock) before the ex-dividend date. If you buy the stock on or after the ex-dividend date, you won’t get the dividend for that period.
1. The Top Half
The top of a stock chart is a procession of vertical bars, running in time from left to right. Each bar represents a period, often one day’s trading.
2. The Bottom Half
The bottom of a stock chart is a more traditional bar graph, showing the trading volume for the same period represented by the bars in the top half. Although most stock news focuses on price, the volume of trade is also crucial in determining the value of a stock.
3. The Trend Line
On both halves, you’ll often also see a line running approximately through the middle of the bars that looks like the sort of line graphs you’re used to seeing. You might also see a chart showing just this line.
4. The Other Trend Line
Some charts include multiple trend lines based on different calculated periods. This goes back to studying averages in middle school.
5. Relative Strength Line
This line usually appears between the top and bottom halves. It compares the stock’s performance for that period to the S&P 500’s. It shows you whether the stock is leading the market or lagging behind other stocks.
What is chart pattern?
Chart patterns are shapes assumed by price charts. Many researchers have found success in predicting future stock prices based on past. If you predict future with reasonable accuracy, you can make decisions on whether to hold a stock or sell it.
What happens if a stock closes lower on a day?
Assume a stock closes lower on a day. If the opening price of the next day is lower than the closing price of the previous day there will be a gap.
What is a trend line in symmetrical triangles?
To understand symmetrical triangles pattern, you should know what is a trend line. A trend line is one that connects all the peaks or all the lows. The line connecting all the peaks is called a resistance line. Similarly, a line connecting all the lows is called a support line.
What is a trend in price?
A trend is the direction of price movement. If the price moves higher with time, you can call it a rising trend. And if the price drops with time, you can call it a falling trend. There will also be instances when the trend will be more or less straight.) Let us begin to discuss the patterns, one-by-one.
What happens if the closing price of the next day is higher than the closing price of the previous day?
If the opening price of the next day is higher than the closing price of the previous day, a gap occurs .
What is technical analysis?
Technical analysis is a broad topic with so many different types of calculations and analysis. A sound knowledge is necessary to predict price movements with reasonable accuracy. Below is a table of contents for all the topics in this post. First few topics carry basic knowledge regarding charts.
Is a pennant a triangle?
A pennant exists relatively for very short durations compared to the triangles. While using technical stock chart patterns for your analysis, you have to keep an eye on the time duration of the patterns. Similar looking patterns may have different meanings depending upon the duration.
