Stock Market Charts
- Details
- Category: Stock Market Report
Stock market prices are often depicted with an open-high-low-close chart with a traditional bar chart of volume at the bottom. A chart is a graphical representation of data, in which "the data is represented by symbols, such as bars in a bar chart, lines in a line chart, or slices in a pie chart". A chart can represent tabular numeric data, functions or some kinds of qualitative structures. The term "chart" as a graphical representation of data has multiple meaning: A data chart is a type of diagram or graph, which organizes and represents a set of numerical or qualitative data. Maps that are adorned with extra information for some specific purpose are often known as charts, such as a nautical chart or aeronautical chart. Other domain specific constructs are sometimes called charts, such as the chord chart in music notation or a record chart for album popularity.
Point and figure is a charting technique used in technical analysis, used to attempt to predict financial market prices. Point and figure charting is unique in that it does not plot price against time as all other techniques do. Instead it plots price against changes in direction by plotting a column of Xs as the price rises and a column of Os as the price falls. The correct way to draw a point and figure chart is to plot every price change but practicality has rendered this difficult to do for a large quantity of stocks so many point and figure chartists use the summary prices at the end of each day. Some prefer to use the day’s closing price and some prefer to use the day’s high or low depending on the direction of the last column.
The charts are constructed by deciding on the value represented by each X and O. Any price change below this value is ignored so point and figure acts as a filter to filter out the smaller price changes. The charts change column when the price changes direction by the value of a certain number of Xs or Os. Traditionally this was one and is called a 1 box reversal chart. More common is three, called a 3 box reversal chart. Because point and figure charts are plotted on squared paper, 45 degree lines may be used to define up trends and down trends from important highs and lows on the chart allowing objective analysis of trends.
