7-15 Resources

Alright, everyone, take a deep breath and relax. You’ve just been assaulted with a lot of information. Don’t panic. As you view real-world examples of these charts, you’ll become more familiar and comfortable with their interpretations. This and other sites will give you all the additional information you need to continue your current journey and prepare Read More…

7-14 Bollinger Bands

In the 1980s, John Bollinger developed a new technical analysis tool to measure the highs and lows of a security price relative to previous trade data. These “trading bands” help investors track and analyze the “bandwidth” of stock prices over a period. The object of Bollinger Bands is to identify a “relative” definition of high Read More…

7-13 Support and Resistance

Support Support in a stock chart forms at an area where the stock’s price seems to not want to move lower. This is due to the presence of buyers at this lower target price. and resistance Resistance in a stock chart forms at an area where the stock’s price seems to not want to move Read More…

7-12 Relative Strength Index (RSI)

RSI is the acronym for “Relative Strength Index.” The RSI was created in 1978 by J. Welles Wilder to compare the strength and magnitude of a stock’s gains and losses in recent time periods. The simple formula converts this winning and losing data into a number ranging from 0 to 100. To keep the analysis Read More…

7-11 Moving Averages

Moving averages The Moving Average is a line on a chart that smooths out the recent price history by calculating the average price over 30 or 60 days (or any number of days). are among the most popular and – important for the newer investor – easy to use and understand trading “tools” available to Read More…

7-10 Fibonacci Ratios

Often called the most accomplished mathematician of the Middle Ages, Leonardo Fibonacci is best known for his “numbers”. It is a sequence starting with 0 and 1, after which every third number is the sum of the previous two numbers. A Fibonacci “sequence” is 0,1,1,2,3,5,8, etc. The Fibonacci “ratios” are 23.6%, 38.2%, 50%, 61.8%, and Read More…

7-09 MACD

This is the acronym for “ moving average The Moving Average is a line on a chart that smooths out the recent price history by calculating the average price over 30 or 60 days (or any number of days). convergence/divergence.” Got it? OK, here’s the simple explanation. This graph shows the difference between a fast- Read More…

7-08 Candlesticks

Candlesticks are a type of stock chart developed in Japan. Instead of lines, a vertical block, which looks like a candlestick, is used to symbolize a day or week’s worth of price action. Candlestick charts track price movements of a security over some time period. An interesting combination of a line and a bar chart, Read More…

7-07 Wedges and Flags

 A wedge in the financial universe describes a triangular shape formed by the intersection of two trendlines, which form the apex. The wedge need not be upward facing and can easily be an inverted triangle. The “falling wedge” is often called a “flag” since it more resembles a pointed flag more than a typical triangle. Read More…

7-06 Trendlines

You’re probably aware that trendlines are important to all of your research on potential purchases or sales of securities. Base numbers are equally important to understand the true meaning of any trends you identify. Depending on the type of chart you are viewing, you’ll also want to establish a solid, unbroken trendline of your own Read More…

7-05 Double Bottom

A double bottom chart will look like a “W.” It indicates that the stock hit bottom market price, had a quick – albeit brief – uptick, and decreased again to turn a “V” shape into a “W.” The two reverse peaks should be around the same floor price and the time period should be similar Read More…

7-04 Breakouts

A breakoutA breakout occurs when a stock’s price moves up quickly above former resistance levels. occurs when market prices move through and continue through former highs/lows that had formed ceilings or floors in the past. Commonly called levels of “ support Support in a stock chart forms at an area where the stock’s price seems Read More…

7-03 Head and Shoulders

Don’t you love the terminology that pictorially associates these charts with their graphic representations? The Head and Shoulders is an extremely popular pattern among investors because it’s one of the most reliable of all chart formations. It also appears to be an easy one to spot. Novice investors often make the mistake of seeing Head Read More…

7-02 Cup with Handle

The Cup with a Handle pattern is one of the best-known stock chart patterns. The Cup patterns follow outlines that simulate an inverted semi-circle (U-shape), indicating a price fall, a bottoming out, and a price rise. Afterwards, there tends to be a rather unstable period marked by a sell-off generated by investors who acquired the Read More…

7-01 How to Read Stock Charts

This chapter will expose you to the most common charts available. Their names and meanings are important to your continuing education and the number of tools you carry in your toolbox in order to evaluate stocks. Understand that it will take some time before you are comfortable reading and interpreting many of these charts. Don’t Read More…