Whether you trade short-term or long-term, discretionary or systematic, your goal as a technician is always the same: to find profitable patterns in price behavior. To accomplish this, technicians use a number of methods to identify the prevailing price trend, or to identify points at which a trend is about to reverse (the time scale, of course, can vary). These basis for these techniques can be roughly divided in two categories: chart analysis and technical indicators. Because basic chart analysis is the backbone of technical trading, we'll explain the most popular chart types, what they tell you, and. | The Technician s Basic Tool The Price Chart By Mark Etzkorn Whether you trade short-term or long-term discretionary or systematic your goal as a technician is always the same to find profitable patterns in price behavior. To accomplish this technicians use a number of methods to identify the prevailing price trend or to identify points at which a trend is about to reverse the time scale of course can vary . These basis for these techniques can be roughly divided in two categories chart analysis and technical indicators. Because basic chart analysis is the backbone of technical trading we ll explain the most popular chart types what they tell you and where chart analysis fits into an overall trading plan. In future articles we ll go into more detail about specific chart pattern and trend analysis. Elements of a price chart Price charts can depict price action in any number of time frames or styles. In almost all cases though the horizontal x-axis of the chart represents time and the vertical y-axis represents price. Before discussing the different types of charts though there are a few simple but important concepts you need to understand. High. The highest price of a given trading period be it an hour day week or month. Low. The lowest price of a given trading period. Opening price or open . The price at the beginning of a trading period usually a day . For stocks the open is the price of the first trade that is recorded after the market opens for futures the opening price represents the average price approximately of the first minute of the trading session. Closing price or close . The last price of the trading session for stocks or the representative trading price of the last minute of the trading session for futures. The closing price takes on special importance because it functions as a representative price for a particular trading session--the price the market arrived at after a day of trading. The closing price is the most commonly used in technical indicator
