Price plotting is an extremely simple task. The daily bar chart has both a vertical and horizontal axis.The vertical axis (along the side of the chart) shows the price scale, while the horizontal axis (along the bottom of the chart) records calendar time. The first step in plotting a given day’s price data is to locate the correct calendar day. This is accomplished simply by looking at the calendar dates along the bottom of the chart. Plot the high, low, and closing (settlement) prices for the market. A vertical bar connects the high and low (the range).The closing price is recorded with a horizontal tic to the right of the bar. (Chartists mark the opening price with a tic to the left of the bar.) Each day simply move one step to the right. Volume is recorded with a vertical bar along the bottom of the chart (See Figure 3-1).
Charts Are Used Primarily to Monitor Trends
Two basic premises of chart analysis are that markets trend and that trends tend to persist. Trend analysis is really what chart analysis is all about.Trends are characterized by a series of peaks and troughs.An uptrend is a series of rising peaks and troughs. A downtrend shows descending peaks and troughs. Finally, trends are usually classified into three categories:major,
secondary, and minor.A major trend lasts more than a year; a secondary trend, from one to three months; and a minor trend, usually a couple of weeks or less.
No comments:
Post a Comment