- 04 Jul,2018
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Types of Charts in Technical Analysis of Stock Market
Writer-Mcx Sure Gain
Charts are graphical illustrations of price representing Auto buy sell over time. Signal software, make use of historical chart data which is a combination of volume and price at regular intervals. Trading platforms like MCX, NSE live, and MT4 data use charts to represent market values alongside technical analyst also known as chartists. Nowadays, charts are created with computers.
In Technical Analysis of Stock and Commodity Market, the chart types and scale used is dependent on what data you which to consider. The key chart types used by technical analysts are
- Bar Chart
- Candlestick Chart
- Line Chart
- Point-And-Figure Charts
- Renko Chart
Bar chart (also known as Open-High-Low-Close (OHLC) charts) is amongst the essential tools used in technical analysis. It includes series of vertical lines showing price range for a given period. With bar charts, traders on MCX, NSE live, MT4, etc., can learn patterns easily by just observing the highs and lows. The horizontal dash represents the opening price on the left side while the horizontal line represents the closing price on the right side.
The candlestick chart is so-called due to the chart core component represented by what looks like a candlestick, with a thick ‘body.’ A line generally extends above (upper shadow) and below (lower shadow) it respectively. They both denote the high and low price respectively. Candlestick charts are most valuable when considering a short time frame. The full part shows the closing and opening price. The thinner parts (also known as upper/lower wicks or as shadows) indicates the highest/lowest prices during for a specified period. The connection between both body parts is key to candlestick patterns as it makes it easy to detect gaps. A small drawback for this chart type is that it uses more space than OHLC bars. In most Trading platforms like MCX, NSE lives, and MT4, the most displayed with candlestick chart is a little less than what is obtained with a bar chart.
Originally from Japan, HeikinAshi charts are comparable to candlestick charts regarding denoting the direction of price movements. HeikenAshi charts are capable of showing downtrend and uptrend more visibly. The significant difference between HeikinAshi and candlestick charts is that HeikinAshi charts use average price moves, thus producing a better representation of market charts. The HeikinAshi charts do not display the exact open and close prices making them more useful as indicators. It can also be used independently.
Line charts are also most basic charts, and it is usually represented by single lines from left to right linking closing prices. The line chart is a simplified chart type used for demonstrations and reports to provide a bright, simple, and general idea of the past and current path. While Line charts do not offer much insight into daily price activities, some traders consider the closing price to be more significant than others.
Point and Figure Chart.
Point and Figure Charts are not very popular amongst average investor but comes with a long history dating back to early technical traders. The Point and Figure Charts only emphasize significant price movements, while removing ‘noise.’ It consists of columns made from O’s and X’s representing the filtered price moves. X-Columns signifies price rise and O-Columns signifies price fall. Time is no factor in Point and Figure Charts, as it is highly dependent on price movement. The creation of this chart streamlines the drawing of resistance levels, support, and trend lines, which makes it ideal for detecting such changes.
Renko Chart offers noiseless charting technique that focusses more on price activities, ignoring time and volumes. Renko Chart uses bricks to denote price rise or not in Auto buy sell. If a notable rise or fall in price is established, a new corresponding brick size is placed. It is also worthy to note that new bricks are only placed using specific criteria as specified to the signal software.
Finally, charts are essential in signal software for Auto buy sell. Each chart listed above has its importance. However, the usage of different chart types is dependent on the trader’s choice and what strategies you plan to implement. So, getting a general acquaintance with these chart options can aid you to become a better analyst with time.