Technical Analysis: Charts !
A technical analysis is a graphical representation of a series of prices over a specified period. For example, a chart may show the price movements of a stock over a one-year period.
Each point of the graph shows the final price an asset is traded on a given day.
Traders should consider two key factors when looking at a chart, since they may affect the information provided:
The time scale refers to the range of dates provided at the bottom of the technical analysis charts. The most frequently used time scales are daily, weekly, monthly, quarterly and annually.
Each data point can represent the closing price of the period.
Price Scale and Price Point Properties
Price scale, found at the right- hand side of the chart, shows the current price of a asset and compares it to past data.
A scale can be constructed in a linear or logarithmic way. If a price scale is constructed in a linear way, it measures moves in absolute terms and does not show the effects of percent change.
In a price scale constructed in logarithmic terms, the distance between points will be equal to percent change.
Next: Reading Fundamental Charts