Chart analysis in stock market is a method of predicting the future price movements of stocks based on their historical price data. The goal is to identify trends and patterns in the price data that can be used to make informed investment decisions.
The same historical price data can be represented in different types of charts that can be used in chart analysis, including line charts, bar charts, and candlestick charts. These charts can show different types of information about a stock, such as its opening and closing prices, its high and low prices, and volume.
One of the most important thing in chart analysis is Trendline and Channels. A trendline is a straight line that is drawn on a stock chart to represent the trend of the stock's price over a period of time. Trendlines are used in chart analysis to help identify potential support and resistance levels for the stock.
To draw a trendline, we typically look for a series of highs or lows in the chart and join them with a straight line. If the trend is up, the trendline is drawn by connecting the series of higher lows. If the trend is down, the trendline is drawn by connecting the series of lower highs.
Once the trendline is drawn, it can be used to identify potential support and resistance levels for the stock. Typically when the price of the stock approaches the trendline it reverses after touching it.
It's important to note that predictions based on trendlines are not guaranteed, there is always a degree of uncertainty and risk involved in investing.
Trendlines should be used in combination with other technical analysis indicators and fundamental analysis to make informed investment decisions.
The same historical price data can be represented in different types of charts that can be used in chart analysis, including line charts, bar charts, and candlestick charts. These charts can show different types of information about a stock, such as its opening and closing prices, its high and low prices, and volume.
One of the most important thing in chart analysis is Trendline and Channels. A trendline is a straight line that is drawn on a stock chart to represent the trend of the stock's price over a period of time. Trendlines are used in chart analysis to help identify potential support and resistance levels for the stock.
To draw a trendline, we typically look for a series of highs or lows in the chart and join them with a straight line. If the trend is up, the trendline is drawn by connecting the series of higher lows. If the trend is down, the trendline is drawn by connecting the series of lower highs.
Once the trendline is drawn, it can be used to identify potential support and resistance levels for the stock. Typically when the price of the stock approaches the trendline it reverses after touching it.
It's important to note that predictions based on trendlines are not guaranteed, there is always a degree of uncertainty and risk involved in investing.
Trendlines should be used in combination with other technical analysis indicators and fundamental analysis to make informed investment decisions.