Basic Stock Charting
As humans, we naturally seek patterns in daily life to make sense of things. These patterns don’t hold true meaning; we create them to interpret our world, which then influences our economy. Identifying patterns is crucial for technical analysis. Without these lines and moving averages, we might just see a price drop and subsequent spike, leaving many confused. For instance, the pattern shown above is a “falling wedge.” This shape indicates that selling pressure is lessening and short sellers are covering their positions.
By drawing these lines, we can predict that when the candle closes above a certain point, the price will likely continue to rise, signaling a buying opportunity. It’s amazing how much insight can come from just a minute of drawing lines. To learn how to identify these patterns, you can find helpful examples on Reddit.
How else can I read a chart?
Many ways,
Line charts
Bar Charts
Typically, I use Japanese candlestick charts
