A chart is the technical analyst's tool.
By charting the price movements of a financial instrument over a period of time, a technical analyst has a convenient and easy-to-read source of information. The technical analyst can see the complete record of a financial instrument's trading history at a glance.
Technical analysis is based on the idea that, to know where financial instrument prices are going, one must know where they have been. Therefore, charts are a fundamental element of technical analysis. Technical market analysis is based on the technical action of the market itself. According to technical analysis, the market is, at its most basic, groups of buyers pitted against groups of sellers.
By putting buyers and sellers together the law of supply and demand is not far behind. According to that law, when demand exceeds supply, prices rise. When supply outruns demand, prices fall.
Knowing if there are more sellers than buyers in a market, for example, will mean knowing that supply exceeds demand and, as a result, prices are declining.
Price charts, by detailing the history of price movements of a financial instrument, are the key tools of the technical analyst. Charts tell the story of whether the market is moving up or down, helping investors to find the financial instruments they wish to buy and determine which financial instruments they want to sell.
Experts usually say that charts do not predict. According to technical analysts, charts are valuable in determining the probabilities of success for the decision to buy or sell or hold. The key to successful technical analysis is figuring out how to analyze the information that charts provide and, in turn, forecast future price movements.
The "trend" is what technical analysts are looking for in their charts. Chart analysis is based on the theory that prices tend to move in trends, and that past price behavior can give clues to the future direction of the trend.
The purpose of chart analysis is to identify and evaluate price trends, with the objective of profiting from the future movement of prices. "A chartist's asset lays not so much in his being able to forecast how high or how low a market will go, or when it will get there, but in being able to identify the direction of a trend and to call the turn of a trend when it comes."
Investors either use Candlestick Charts frequently, or they are completely turned off by them. There are several patterns to look for with candlestick charts - here are a few of the popular ones and what they mean:
Doji
A name for candlesticks that provides information on their own and also feature in a number of important patterns. Doji is formed when a financial instrument’s “open” and “close” prices are virtually equal.
There are over 20 other patterns used by technical analysts for candlestick charting.
By charting the price movements of a financial instrument over a period of time, a technical analyst has a convenient and easy-to-read source of information. The technical analyst can see the complete record of a financial instrument's trading history at a glance.
Technical analysis is based on the idea that, to know where financial instrument prices are going, one must know where they have been. Therefore, charts are a fundamental element of technical analysis. Technical market analysis is based on the technical action of the market itself. According to technical analysis, the market is, at its most basic, groups of buyers pitted against groups of sellers.
By putting buyers and sellers together the law of supply and demand is not far behind. According to that law, when demand exceeds supply, prices rise. When supply outruns demand, prices fall.
Knowing if there are more sellers than buyers in a market, for example, will mean knowing that supply exceeds demand and, as a result, prices are declining.
Price charts, by detailing the history of price movements of a financial instrument, are the key tools of the technical analyst. Charts tell the story of whether the market is moving up or down, helping investors to find the financial instruments they wish to buy and determine which financial instruments they want to sell.
Experts usually say that charts do not predict. According to technical analysts, charts are valuable in determining the probabilities of success for the decision to buy or sell or hold. The key to successful technical analysis is figuring out how to analyze the information that charts provide and, in turn, forecast future price movements.
The "trend" is what technical analysts are looking for in their charts. Chart analysis is based on the theory that prices tend to move in trends, and that past price behavior can give clues to the future direction of the trend.
The purpose of chart analysis is to identify and evaluate price trends, with the objective of profiting from the future movement of prices. "A chartist's asset lays not so much in his being able to forecast how high or how low a market will go, or when it will get there, but in being able to identify the direction of a trend and to call the turn of a trend when it comes."
Investors either use Candlestick Charts frequently, or they are completely turned off by them. There are several patterns to look for with candlestick charts - here are a few of the popular ones and what they mean:
 | This is a bullish pattern - the financial instrument opened at (or near) it’s low and closed near it’s high. |
 | The opposite of the pattern above, this is a bearish pattern. It indicates that the financial instrument opened at (or near) it’s high and dropped substantially to close near its low. |
 | Known as "the hammer", this is a bullish pattern only if it occurs after the financial instrument price has dropped for several days. A hammer is identified by a small body along with a large range. The theory is that this pattern can indicate that a reversal in the downtrend is in the works. |
 | Known as a "star", this pattern is used in other patterns such as the "doji star". For the most part, stars typically indicate a reversal and or indecision. There is a possibility that after seeing a star there will be a reversal or change in the current trend. |
Doji
A name for candlesticks that provides information on their own and also feature in a number of important patterns. Doji is formed when a financial instrument’s “open” and “close” prices are virtually equal.
| A doji candlestick looks like a cross, inverted cross, or plus sign. Alone, doji are neutral patterns. |
There are over 20 other patterns used by technical analysts for candlestick charting.
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