Stock trading can be heavy for beginners, but to understand how to read the stock map, there is a basic skill that can help you make informed decisions. Whether you are a mastery in a day -lang merchant, swing trader or long -lasting investor, candlestick patterns and technical analysis, you can significantly improve your ability to predict price movements. How to read stock charts?
In this broad guide we will break:
- Basic about stock maps
- Understand candlestick patterns
- Greater technical analysis equipment
- How to combine patterns and indicators for better trade
- Towards the end, you will have a solid base to analyze a Pro as a share map.
- Basic about stock chart
Share maps represent price movements over visual time. There are three most common types:
- A. Line mapThe simplest form, adding the prices to shut down for a period of time.
- Long -lasting trends are useful to identify, but lack expansion.
B. Bar Chart (Ohlc chart)
Open, high, low and close (OHLC) prices show prices for a certain period.
Represents a single trade session every time.
C. Candlestick Chart (most popular)
The bar similar to the bar map, but more visually intuitive.
Each “candlestick” reflects open, high, low and close prices.
Colors indicate speed (green/white) or recession (red/black) movements.
1.Why candlesticks are the same:
- Provide more price actions.
- Reveal market spirit (greed versus fear).
- Help in spot trend reversal and participants.
2.Understand candlestick patterns
Candlestick patterns are forms that traders use to predict future price movements. They fall into two categories, How to Read Stock Charts..
A. Single candlestake pattern
Types :
Doji
Appearance: Open and close prices are almost identical (little or no body).
Standard Doji: Neutral signal.
Dragonfly Doji: Possible fast reversion.
Gravstein Doji: Possible recession reversed.
Hammer and Hanging man :
Hammer :
- Small body, long lower week, small/no upper things.
- The shape of a dowtrand, which indicates a possible reversal.
Hanging Man (recession reversed):
The same structure in the form of a hammer, but one appears after a trend.
Shooting Star and Inverted Hammer
Shooting Star :
The short body, long upper weeks, appears after a trend.
Inverted hammer :
Like a shooting star, but a downtrend suggests quickly.
How to read stock charts? Attached pattern
Quick connection:
- A small candle is followed by a very fast candle that “attaches” it.
- A potentially upwards suggests upwards.
Recession attached:
- A large recession after a small candle.
- A potential indicates reversal at the bottom.
Multi-Candlestick Pattern
Morning Star (Rapid Reversal):
Three candles: A long recession, a short unseen candle (doji or spinning top), then a much fast candle.
Evening Star (recession reversed):
Unlike Morning Star – appears on top of a trend.
Three white soldiers and three black crows
Three white soldiers :
Three subsequent green lights with short weeks.
Three black crows :
Three subsequent red lights with short weeks.
Major technical analysis equipment
Candlestick patterns are not enough alone – you need technical indicators to confirm trends.
Moving the average (MA)
Easy moving average (SMA): Average price in a fixed period.
Experial Moving Average (EMA): Recent prices give more weight.
General uses:
Golden Cross (Bulish): The 50-day Ema crosses over 200-day EMA.
Death Cross (recession): The 50-day EMA is under the 200-day EMA.
Macd (moving average convergence deviation)
Measure the speed of comparing two EMAs (usually 12 and 26 periods).
Bulle Signal: MacD crosses the line above the signal line.
Recession signal: The MacD line crosses under the signal line.
B. Momentum Indicators
- Relative power index (RSI)
Remedy Overbott (over 70) or oversold (under 30) conditions.
Helps discover the potential reversal.
- Bollinger -Band
A middle SMA (20 period) and two external ties (standard deviations) are included.
- The price to touch the upper tape = overbot.
- The price to touch the lower band = oversold.
3. Volume indicator
- Alance Volume (Note)
Spores buying and selling pressure. - Rising OBT confirms a trend; The falling Obav confirms a downtrend.
- How to combine patterns and indicators for better trade
To increase the accuracy, mix candlestick patterns with technical indicators:
Example of business setup:
Get a rapidly attached pattern after a down.
Check RSI: Is it under 30 (oversold)?
Confirm with MacD: Cross the MacD line above the signal line?
Volume control: Does the purchase volume grow (increases OB)?
Set stop-loss: Recently during recent administration risk.
Common errors to escape:
- More rilling on an indicator (always use more confirmation).
- Ignore the volume (the patterns are weak without volume support).
- Failure to put stop losses (risk management is important).
