Using Technical Analysis Chart information in Your Investing?

Technical Analysis is the forecasting of future price movement based on the examination of past price movements. Technical analysis does not result in absolute predictions about the future. Instead, technical analysis helps investors anticipate what is “likely” to happen to prices over time. Technical analysis uses a wide variety of technical analysis charts which display a stock’s price and volume.A technical analysis chart is a sequence of prices plotted over a specific time frame. On the chart, the y-axis (vertical axis) represents the price scale and the x-axis (horizontal axis) represents the time scale. Prices are plotted from left to right across the x-axis with the most recent plot being the furthest right. At the bottom of the chart the volume for each time period is plotted with vertical bars.

Three primary types of technical analysis charts

1. Line Chart- is charted only with the closing price. The open, high or low and intraday swings are ignored
2. Bar Chart (OHLC Chart)- is perhaps the most popular technical analysis chart. The high, low and close are used to form the price plot for each period of a bar chart.
3. Candlestick (Japanese Candlestick) – Candlestick charts display the open, high, low, and closing prices in a format similar to a modern-day bar-chart, but in a manner that extenuates the relationship between the opening and closing prices. It gives the chart or the candlestick almost a three dimensional effect. Each “bar ” is called a candle. Price patterns can been seen more clearly and distinctly with candlesticks.

Price is definitely more important than volume but volume confirms the price action and often gives advance warning of an impending shift in trend. Volume measures the momentum behind a given price move