recognize a trend on the charts can determine where prices are most likely to

go until some unforeseen event comes along that creates a new trend.
The basic element of technical analysis is a bar, which shows you the high, low,
open, and closing price of a security for a given day. It looks like Figure 12-1.
In most markets, every day generates a new bar (many traders talk about
bars instead of days, and they arent talking about where they go after work).
A collection of bars, with all their different high, low, open, and close points,
is put together into a larger chart. Often, a plot of the volume for each bar
runs underneath, with the result looking like Figure 12-2.
Many patterns formed in the charts are associated with future price moves.
Technical analysts thus spend a lot of time looking at the charts to see if they
can predict what will happen. Many software packages (some of which are
discussed in Chapter 7) send traders signals when certain technical patterns
occur, so that the traders can place orders accordingly.
45
40
35
30
6.0
4.0
2.0
0.0
M
i
l
l
i
o
n
s
Figure 12-2:
Heres a plot
of volume
underneath
a years
worth of
bars.
High
Close
Open
Low
Figure 12-1:
A bar
displays
high, low,
open, and
closing.
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