Scroll down to see a list of Internet sites that will provide an education about Chart Types.
The major chart types are line, bar and candlestick. Most charting software will display these types of charts. Point and Figure, tick and price-volume charts are not as popular. Market carpets, or heat-zones, are becoming increasingly available.
Line and bar charts need no explanation so the education below is for candlestick charts, Point and Figure charts and market carpets.
When using technical analysis it is important to look at charts for multiple time frames. Shorter time frames will help with the entry point and longer timeframes will help to ensure that the major trend is in the direction of the investment being made. In other words, if we are interested mainly in working off a daily chart, we should look at intra-day charts for entry points and weekly charts to see the bigger picture. It is relatively rare for all the chart patterns and indicators to line up in favor of an investment across all the timeframes, but it does happen.
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Candlestick Charts
Line and bar charts are the traditional and simplest charts but many claim that candlestick charts are superior. Candlestick charts were first used in Japan. Fortunately most of Japanese terminology has been replaced by English terms, but a few Japanese terms remain, for example, doji (pronounced doh-jee).
To use and discuss candlestick charts we need to know the terms used for single candlesticks and multi-candlestick chart patterns. Terms such as body, shadow, long day, short day refer to the individual candle, while terms such as doji, maribozu, hammer and dozens more refer to the pattern in the chart. Some patterns, like a doji or an engulfing candle, are single candlesticks, and others, like Three Black Crows, are multi-candle patterns.
Sites that will provide this education are:
http://www.candlecharts.com/ has free education at the site and in the newsletter. Steve Nison is an acknowledged expert on candlestick charting. He gives us the basics of candlestick charting and also some advanced papers, such as “Spotting Early Reversal Signals by Using Candle Charts”. We need to look in the About Us section of the site to find this education.
http://www.candlestickshop.com/ has an on-line course and articles about candlesticks.
http://www.britefutures.com/ offers candlestick charting information in the New Traders section.
http://www.chartsmarts.com/ has a tutorial on using candlestick charts for pattern and trend recognition in the Answers and Information section.
http://www.tradingday.com/ has a candlesticks tutorial that includes how to play some of the candlestick chart patterns.
http://www.litwick.com/ explains candlesticks and some candlestick terms.
http://www.nasdaq.com/ will display a chart and name the candlestick pattern the chart displays for any symbol entered.
http://www.hotcandlestick.com/ has an extensive tutorial that is reached by clicking on the How Do You Describe a Japanese Candlestick message.
Point and Figure Charts
Less popular but very instructive, Point and Figure charts look quite different from line, bar and candlestick charts of price against time.
http://www.stockcharts.com/ has an article in its Chart School on Understanding Point and Figure Charts that gives a very adequate explanation. Point and Figure charts consist of columns of X's and O's that represent price movements over time.
http://www.guppytraders.com/ gives an explanation of four different methods of constructing point and figure charts. On the home page the boxes are all for subscription services but clicking on the title at the top of the home page brings up a list of topics, one of which is point and figure charting.
http://www.dorseywright.com/ has tutorials on Point and Figure charting, and
http://www.investorsintelligence.com/ has an article which is an introduction to point and figure charting.
http://ianrpubs.unl.edu/farmmgt/g1059.htm shows a number of buy and sell chart patterns.
Market Carpets
http://www.stockcharts.com/ has ProFunds and Rydex carpets in its Market Carpet section, together with an explanation of market carpets.
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