CHARTS

Unit 1-Topic 3

Prof.Rugved Shivgan
 Introduction

 Charts are the working tools of technical analysts. They use charts to plot the
price movements of a stock over specific time frames.

 It's a graphical method of showing where stock prices have been in the past. A
chart gives us a complete picture of a stock's price history over a period of an
hour, day, week, month or many years. It has an x-axis (horizontal) and a y-axis
(vertical). Typically, the x-axis represents time; the y-axis represents price. By
plotting a stock's price over a period of time, we end up with a pictorial
representation of any stock's trading history.

 A chart can also depict the history of the volume of trading in a stock. That is, a
chart can illustrate the number of shares that change hands over a certain time
period.

Prof.Rugved Shivgan 2
 Types of price charts

1. Line charts Diagram

 "Line charts" are formed by connecting

the closing prices of a specific stock or
market over a given period of time.

 Line chart is particularly useful for

providing a clear visual illustration of
the trend of a stock's price or a
market's movement.

 It is an extremely valuable analytical

tool which has been used by traders
for past many years.

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 3.Point & Figure Charts Diagram

 Point & Figure charts consist of columns

of X's and O's that
represent filtered price movements.

 X-Columns represent rising prices and

O-Columns represent falling prices.

 Time is not a factor in P&F charting.

These charts evolve as prices move. No
movement in price means no change in
the P&F chart.

 It follows 3-box reversal method,

column reversals requiring minimum
3-box to reverse the current column.

Prof.Rugved Shivgan 4
 2. Bar chart Diagram

 Bar chart is the most popular method

traders use to see price action in a stock
over a given period of time. Such visual
representation of price activity helps in
spotting trends and patterns.

 Although daily bar charts are best known,

bar charts can be created for any time
period - weekly and monthly,

 A bar shows the high price for the period

at the top and the lowest price at the
bottom of the bar. Small lines on either side
of the vertical bar serve to mark the
opening and closing prices. The opening
price is marked by a small tick to the left of
the bar; the closing price is shown by a
similar tick to the right of the bar. Many
investors work with bar charts created over
a matter of minutes during a day's trading.
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 Diagram
3. Candlesticks

Formation
 Candlestick charts provide visual
insight to current market
psychology.

 A candlestick displays the open,

high, low, and closing prices in a
format similar to a modern-day
bar-chart.

 Candlesticks don’t involve any

calculations. Each candlestick
represents one period (e.g., day)
of data.

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 A candlestick chart can be created using the data of high, low, open and closing prices for
each time period that you want to display.

 The hollow or filled portion of the candlestick is called "the body" (also referred to as "the
real body").

 The long thin lines above and below the body represent the high/low range and are
called "shadows" (also referred to as "wicks" and "tails"). The high is marked by the top of
the upper shadow and the low by the bottom of the lower shadow.

 If the stock closes higher than its opening price, a hollow candlestick is drawn
with the bottom of the body representing the opening price and the top of the body
representing the closing price. Hollow candlesticks, where the close is greater than the
open, indicate buying pressure.

 If the stock closes lower than its opening price, a filled candlestick is drawn with the
top of the body representing the opening price and the bottom of the body representing
the closing price. Filled candlesticks, where the close is less than the open, indicate
selling pressure. 7
Prof.Rugved Shivgan
Candlestick Chart Diagram

Prof.Rugved Shivgan 8
THANK YOU