Technical analysis I

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11. Other types of chart

The charts on the previous four pages - line, bar, volume and point and figure - account for 95% of the charts used by most technical analysts.

There are other charts used by a minority which are beyond the scope of this workshop, notably:

1. Candlesticks

   This is similar to the bar chart in that a line is drawn from the highest price to the lowest price achieved during the day. But instead of using ticks, a horizontal line is drawn across the high-low line at the opening price, and a second line is drawn across at the closing price.

   The area between these two horizontal lines is now boxed and filled-in with a solid colour if the closing price is lower than the opening price. If the opposite is true, and the opening price is lower than the closing price, then the box is left empty.

   A candlestick chart

   
   
   

2. Equivolume

   Instead of simply displaying volume as a subsidiary line on a main price chart, equivolume charts combine price and volume in a two dimensional box.

   • The top horizontal line of the box is drawn at the highest price attained during a trading period, whilst the bottom horizontal line represents the lowest price achieved.
   • The width of the box is determined by the volume of trades which have taken place and is a unique feature of the equivolume charting method. It suggests that traded volume, rather than time, is the main guiding influence on the changes in price of a financial instrument.

   An equivolume chart

   
   
   

1. What is technical analysis? 2. Technical analysis compared to fundamental analysis 3. What technical analysis is not 4. Dow Theory 5. Price data 6. Volume data 7. Line charts 8. Bar charts 9. Volume charts 10. Point and figure charts 11. Other types of chart 12. Trends - the basics 13. Simple trend lines 14. Making money from trend lines 15. Trend channels 16. Support and Resistance 17. Breakouts 18. Is technical analysis for you? 19. Software for technical analysis 20. Conclusion

• An Introduction to Technical Analysis - Reuters Financial Training Series
• Technical Analysis Plain and Simple
• Technical Analysis of the Financial Markets
• Martin Pring's Introduction to Technical Analysis