|
A New
Way to Look at Prices
Would you like to learn about a type of commodity futures price chart
that is more effective than the type you are probably using now? If
so, keep reading. If you are brand new to the art/science of chart
reading, don't worry, this stuff is really quite simple to learn.
Technical Analysis - a Brief Background
Technical analysis is simply the study of prices as reflected on price
charts. Technical analysis assumes that current prices should
represent all known information about the markets. Prices not only
reflect intrinsic facts, they also represent human emotion and the
pervasive mass psychology and mood of the moment. Prices are, in the
end, a function of supply and demand. However, on a moment to moment
basis, human emotions. fear, greed, panic, hysteria, elation, etc.
also dramatically effect prices. Markets may move based upon people's
expectations, not necessarily facts. A market "technician" attempts to
disregard the emotional component of trading by making his decisions
based upon chart formations, assuming that prices reflect both facts
and emotion.
Standard bar charts are commonly used to convey price activity into an
easily readable chart. Usually four elements make up a bar chart, the
Open, High, Low, and Close for the trading session/time period. A
price bar can represent any time frame the user wishes, from 1 minute
to 1 month. The total vertical length/height of the bar represents the
entire trading range for the period. The top of the bar represents the
highest price of the period, and the bottom of the bar represents the
lowest price of the period. The Open is represented by a small dash to
the left of the bar, and the Close for the session is a small dash to
the right of the bar. Below is a standard bar chart example.
Download |
