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Technical Analysis

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How to Dissect a Trading Chart Candlestick Bar

In trading charts, candlestick bars display the price bar in a graphically different way from the standard bars. Candlestick charting was developed in Japan at least 150 years ago, where traders applied [more…]

How to Interpret Trading Chart Candlestick Patterns

Two similar candlesticks or candlestick patterns on a trading chart often have the exact opposite interpretation, depending on where they fall in a series. You have to memorize the exact patterns to avoid [more…]

How to Identify Trading Chart Candlestick Reversal Patterns

Dozens of possible trading chart candlestick bar placement combinations and permutations are possible. These special “emotional extreme” candlestick patterns, including reversal patterns, are unique to [more…]

How to Identify Trading Chart Candlestick Continuation Patterns

In trading charts, candlestick patterns are most often used to identify reversals, but continuation patterns do exist. As the name suggests, a continuation pattern [more…]

How to Combine Candlesticks with Other Market Indicators

You can combine candlestick price bars with other market indicators to better understand how the security is being traded. Many traders who don’t act directly on the information contained in the candlestick [more…]

How to Trade on Candlestick Price Bars Alone

To do a good job interpreting candlestick price bars and trading based on that information, you need to understand the dynamic and complex relationships of many patterns all at once, like juggling six [more…]

How to Identify Trading Chart Patterns

Trading chart patterns are indicators consisting of geometric shapes drawn on the chart, such as a triangle. Like with most market indicators, a price forecast is embedded in the trading pattern identification [more…]

How to Use Trading Chart Continuation Patterns

In a trading chart, a continuation pattern tells you that buying or selling pressure is pausing. If a big-picture trend is well established in the trades you’re charting, the pattern suggests it will accelerate [more…]

How to Spot Trading Chart Classic Reversal Patterns

Patterns come into their own when you analyze stock trading charts if you use them to identify a trend reversal. No matter how a trend comes to an end, chances are good that a pattern exists to identify [more…]

How to Evaluate a Technical Analysis Measured Move

The term measured move is used in a number of contexts in technical analysis, so it can become confusing. In essence, a measured move is a forecast of the upcoming price move after a chart event, including [more…]

How to Draw Rules-Based Trading Chart Trendlines

You can draw any old line that your eye dictates when creating trendlines on a trading chart, but rule-based trendlines have a long history of actually working to improve trading results, in part because [more…]

How to Use Support Lines in Trading Charts

A specific trading chart rule-based trendline is named a support line because you expect the line to support the price — stock traders won’t let the price fall below it. You start at the lowest low and [more…]

How to Use Resistance Lines in Trading Charts

In a trading chart, a resistance line is drawn along a series of highs marks where buyers resist buying more — the price is too high for them. Traders expect sellers to emerge at the resistance line [more…]

How to Draw a Linear Regression on a Trading Chart

On a trading chart, you can draw a line (called the linear regression line) that goes through the center of the price series, rather than along its edges. Although you can’t technically draw a straight [more…]

How to Weigh the Pros and Cons of Trading Chart Straight-Line Channels

On a trading chart, a straight-line channel is a pair of trendlines encasing a price series. It consists of one line drawn along the top of a price series and another line, parallel to the first, along [more…]

How to Use Trading Chart Channels to Make Profit and Avoid Loss

A trading chart channel is a pair of straight-line trendlines encasing a price series. You can use a channel to help you determine how to make profit and avoid loss in the market. A channel consists of [more…]

How to Identify Breakouts in Trading Charts

The breakout is one of the most important concepts in technical analysis. It’s a direct, graphic representation that something happened to change the market’s sentiment toward a security. In the simplest [more…]

How to Put Trading Chart Breakouts into Context

When you look at a trading chart, a genuine breakout from you trend channel means that channel is now defunct. You need to discard it. To verify that the breakout truly ended the trend, you need to evaluate [more…]

How to Find a Pivot Point Support and Resistance Channel in a Trading Chart

One technique for dealing with sideways moves within a trading chart channel is to draw horizontal support and resistance lines off pivot points. Technical traders use the term [more…]

Filter Out Whipsaws from Your Trading Decisions

False signals on a trading chart usually reverse fairly quickly, putting you back in the trade in the right direction, but in the meanwhile, you take a small loss, called a [more…]

How to Deal with Limitations of Trading Chart Averages

Calculating moving averages on a trading chart can give you vital information about how securities are trending. But averages can’t tell you everything, and they can even mislead you. Moving averages lose [more…]

The Types of Trading Chart Moving Averages

You can adjust the moving average on a trading chart to make it track current prices more closely without sacrificing all the benefits of the averaging process. Moving averages come in a number of forms [more…]

How to Calculate Moving Average Convergence and Divergence

If you look at any two moving average crossovers in a trading chart, you see that at a turning point, the short moving average converges to the price and the long-term moving average converges, a bit later [more…]

How to Interpret the MACD on a Trading Chart

On a trading chart, the moving average convergence-divergence indicator (MACD) was designed use exponential moving averages of 26 and 12 days, although the MACD is a model into which you can insert any [more…]

How to Calculate Security Price Momentum with the Subtraction Method

When evaluating a trading chart, everything you really need to know about security price momentum is that it compares the price today with the price x periods ago. A higher number means a faster speed [more…]

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