(also called as Stock Charts) are the heart and soul of technical analysis. For this reason, technical analysts are also known as 'chartists'.
It is rightly said that a picture is worth a thousand words. A chart of a stock / commodity / forex price tells much about the probable trend of the price - if it is likely to move up, move down, or if it is moving sideways.
Most of the times, technical charts have the price on the Y-axis and the time on the X-axis. Technical analysts then apply various indicators to this chart to arrive at a Buy / Sell / hold strategy.
Normally, technical charts are based on the closing price of the day's session; some indicators may require other prices (open, high, low).
Many exchanges today (stock exchanges / commodity exchanges / Forex exchanges) provide online access to the traded data on a daily basis. This enables technical analysts to construe stock charts real time.
Stock charts are one of the easiest ways to get a visual clue regarding the price of a share. And the more data you have, the more accurately you can predict the price movement. Serious stocks investing people tpically look at the long term trend of the stock chart; day traders prefer to take a look at the technical charts for a very short time span (typically 3 months or less)
Japanese candlesticks also use technical charts to predict the price movement. These patterns take cognizance of all the prices for the day's trading session. Predictions are then made depending upon the patterns that emerge from the prices.
Click here for a live demo of a technical chart using the Japanese candlesticks patterns.
It does not matter if you are a day trader or into serious stock investing. Technical analysis helps you achieve your short term and long term goals. Learn all about technical charts, stock charts, candle patterns or support and resistance theory in our technical analysis primer.
