If you’re investing in stocks, charts are essential. They give you a visual representation of how a stocks price has moved over time and can reveal signals that help guide your actions.
Most charts plot stock price over time and time on the horizontal axis. Youll usually see a line or candlestick chart. Line charts show basic price movement, while candlestick charts offer more detail, including intraday volatility.
Understanding trends is crucial. An upward trend suggests the stock is gaining momentum, while a downward trend can indicate decline. Look for higher highs and higher lows to confirm an uptrend.
Support and resistance levels are also important. Support is a price level where demand tends to push the stock up. Resistance is where selling pressure often causes the stock to drop. These levels help traders anticipate reversals.
Volume adds another layer of insight. If a stock breaks resistance on high volume, that move is more trustworthy. Low volume moves may be less reliable.
Moving averages like the 50-day and 200-day are widely used. When the 50-day crosses above the 200-day, its called a golden cross. The opposite, buy hims hers health shares a death cross, signals potential downturn.
Indicators like RSI (Relative Strength Index) or MACD (Moving Average Convergence Divergence) can give overbought/oversold alerts. An RSI over 70 often means the stock is stretched, while below 30 suggests it may be oversold.
Even beginners can benefit from learning these basics. Start with the chart of companies you knowlike Apple, Microsoft, or Amazonand watch how their patterns behave during earnings reports or news events.
With practice, reading stock charts becomes a core part of your analysis. Just remember: charts show the pastthey dont guarantee the future. Use them as a guide, not a crystal ball.
