How to Read Stock Charts - The Ultimate Guide

TIM THOMAS TIM THOMAS Read more

Wouldn’t it be great if you could improve your investment returns by owning securities when prices are increasing and selling them before they crash? If you learn how to read stock charts, you might have a chance to do so.

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Technical analysis or reading stock charts has always intrigued me. If I could use stock charts to help me sell a stock before the price falls too much or at least not buy it until it has hit its low price, it seems to me that the value of my portfolio would be higher than my current strategy of buying stocks and holding them forever.

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Uses of Stock Charts

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When a stock has been volatile or decreasing in price, it sometimes drops to approximately the same price two or more times and then starts increasing. That price is called a support level.

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A resistance level is the opposite of a support level. Rather than looking at two low prices about the same, a resistance level is a price a stock hits more than once but doesn’t exceed.

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Bollinger bands are a refinement of support and resistance levels. They take into account recent trends and volatility in the stock price. There are many ways that Bollinger bands are used to identify trends in stock prices.

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Some technical analysts look at how the stock price has moved compared to averages of its recent prices.

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So far, all of the technical analysis tools I’ve discussed have focused on price movements. Some analysts also look at how the volume changes in conjunction with prices.

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Swipe up to read the full article to learn more about volume and other technical indicators

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How to Read Stock Charts - The Ultimate Guide

Wouldn’t it be great if you could improve your investment returns by owning securities when prices are increasing and selling them before they crash? If you learn how to read stock charts, you might have a chance to do so.

Uses of Stock Charts

A simple tool used by technical analysts in deciding when to buy or sell a stock is the combination of support and resistance levels.

Support and Resistance Levels

When a stock has been volatile or decreasing in price, it sometimes drops to approximately the same price two or more times and then starts increasing. That price is called a support level.

Support Levels

A resistance level is the opposite of a support level. Rather than looking at two low prices about the same, a resistance level is a price a stock hits more than once but doesn’t exceed.

Resistance Levels

Bollinger bands are a refinement of support and resistance levels. They take into account recent trends and volatility in the stock price. There are many ways that Bollinger bands are used to identify trends in stock prices.

Bollinger Bands

Some technical analysts look at how the stock price has moved compared to averages of its recent prices.

Moving Averages

So far, all of the technical analysis tools I’ve discussed have focused on price movements. Some analysts also look at how the volume changes in conjunction with prices.

Volume Indicators

Swipe up to read the full article to learn more about volume and other technical indicators

READ MORE