How To Read Stock Charts: Nvidia, Amazon, Lululemon Reveal This Key Investing Skill

how to read stock charts

Any major news about the company, whether good or bad, increases the trading volume. An increase in volume may also shift the price of the stock quickly.

how to read stock charts

However, since time is not used as an input, P&F charts offer little guidance on timing, e.g. how long it will take for profit objectives to be met. Support and resistance levels are key to understanding a stock’s future action. Volume often displays in vertical bars at the bottom of the chart. For example, a horizontal volume bar below a five-minute candle will tell you how many shares traded in that five-minute period.

Key Takeaways

Volume – Volume is extremely important as it helps determine market momentum. Each bar represents one day, and the red line going through the tops is the average volume over the last xx days . So, the taller the volume bar, the more shares of stock that were traded that day. If you’ve just begun learning how to read stock charts, line charts such as Alphabet’s above are akin to swimming in the shallow end of the pool—they’re great for beginners.

  • Point and figure charts – A point and figure chart is concerned only with price, not time or volume.
  • If the close is higher than the open, the real body is white.
  • The „cup“ portion of the pattern should be a „U“ shape that resembles the rounding of a bowl rather than a „V“ shape with equal highs on both sides of the cup.
  • As always, though, past performance isn’t indicative of future performance.

Yahoo! Finance offers free real-time quotes for stocks listed on the New York Stock Exchange and Nasdaq indexes that are provided by Nasdaq Last Sale. Here are a few of the best free real-time stock charting platforms to check out. Free stock data is useful for new traders looking to experiment and learn how to craft trading techniques. The red and green versions of the Candlestick and OHLC chart styles convey extra meaning through the colors. This same meaning is also visible in the monochrome version of these chart styles, but some investors find the green and red versions help them to interpret the meaning faster. Reversal pattern – When a trend ends and changes direction, it’s called a trend reversal pattern.

Stock Chart: Resistance Levels

A price gap up or down in price can actually be a determination of the overall direction the stock will move in the coming months. A big price gap on very high volume, which means strong institutional buying of the stock, could mean more higher prices to come. Stock market trends are one of the most powerful technical tools we have. Learn how to apply them to your analysis and positive results will follow as you begin predicting stock trends.

how to read stock charts

Watch the slope – The slope of a trend indicates how much the price should move each day. Here we see the support ENER has received while forming its latest base. A common trend is for resistance to turn into support, which we can see with the first “3” on the left. how to read stock charts In a Accumulation day, a stock closes the day _______ , whereas in a Distribution day, a stock ends the day ________ . Volume is simply the number of _______ traded in a given day. Every stock I was watching on my August biotech watchlist charted poorly as…


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