Adding Key Overlays to Stock Charts for Decision Making

By Greg Schnell, Lita Epstein

Part of Stock Charts For Dummies Cheat Sheet

Many types of overlays are available to help you read your stock charts. Here are some of the basic overlays you can add to your stock charts:

  • Moving averages: Help you more easily spot a trend by smoothing out price action based on past prices
  • Horizontal line: Enables you to more easily see the top and bottom of a trend
  • Price channels: Help you see the highest high and the lowest low on a chart
  • Bollinger Bands: Show the upper and lower limits of normal price movements
  • Keltner channels: Show the upper and lower limits for price movements based on an average of prices
  • Moving average envelopes: Form a channel using simple moving averages
  • Events: Mark important events such as dividends and stock splits
  • Pivot points: Show the point at which the largest price movement is expected (used primarily by short-term traders)