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Technical Analysis Through Charts
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A collection of candlesticks is called a stock chart. These charts give the price action of a stock over a larger time period, such as a week, month, or year. For example the stock chart below is a daily chart, this means that each candlestick on the chart represents one days worth of price action. The chart below shows us about 6 months worth of price action data split up into daily candlesticks. In technical analysis we use these charts to organize price action and identify chart patterns and key areas such as support and resistance.
Stock Chart Basics:
Stock Charts for Beginners
How to Read Stock Charts
The above image of a stock chart gives us a lot of information about a specific ticker symbol. You want to make sure you can easily find the information you need and that you clearly understand that information.
Along the right hand side of the chart you can see a price range that the stock has recently trade and the price it is currently trading at. For the above example our trading range would be from about $8.00 to almost $13.50 and our current price is $12.90.
On the bottom of the chart you can see the time frame and dates that correlate with this chart. We can see the price action from September of 2015 through February of 2016.
The bars along the bottom represent the amount of volume that was traded for that particular day. Near the bottom left you can see the number amount of shares that was traded on those days. As you can see on some of the biggest volume days we traded near 2 million shares.
The red and blue lines are what we call moving averages. If you look at the upper left corner you can see that blue lines represents a 50ma (moving average) and the red line represents a 200ma (moving average). Since we are looking at a daily chart and daily candlesticks, then these two numbers represent the average price over the last 50 days and the last 200 trading days. We will get more into moving averages at another time.
Time Frames With Stock Charts
Stock charts like candlesticks can come in many different time frame variations. If you are trying to gather information over an extended period of time like 5 years, you are going to want to look at a weekly candlestick arrangement as this will give you a more clear picture of recent price action. If you are trying to hone in on the last 2 weeks of trading action you are probably better off looking at per say a 15, 30, or 60 minute candlestick chart.
Take a deeper look into stock charts at Stockcharts.com for more indepth information.