How To Read Stock Charts: Understanding Technical Analysis Investor’s Business Daily

how to read stock charts

Learning how to spot these formations enables you to buy stocks at the best time with the least amount of risk. Tracking price and volume in tandem with each other how to read stock charts gives unbiased, opinion-free insight into the behavior of the market and individual stocks. A combination of price and volume are at the heart of the storytelling.

how to read stock charts

The fluctuation in bar size is because of the way each bar is constructed. The vertical height of the bar reflects the range between the high and low price of the bar period. The price bar also records the period’s opening and closing prices with attached horizontal lines; the left line represents the open, and the right line represents the close. Bars may increase or decrease in size from one bar to the next or over a range of bars. Notice how the bars expand and contract between periods of high and low volatility. As the market becomes increasingly volatile, the bars become larger and the price swings further.

Cup and Handle

Lower indicators show below the price history chart to prevent confusion. Any online broker shows the current and historical share price. You can also access free price charts on the Google and Yahoo search engines. The length of the bar shows how much the stock moved over that period. Beta is a measure of a stock’s volatility relative to the systematic risk of the stock market (as represented by the S&P 500 index or a total stock market index). In some cases, the bottom of the y-axis will represent a price level of $0, but often that is not the case, with the lowest price level shown being a higher price point.

How accurate are stock analysis?

How accurate are Wall Street analyst ratings? Some Wall Street analyst ratings are highly accurate, meaning their ratings lead to successful returns for investors. However, in the stock market, nothing is truly guaranteed. This means investors want to interpret analyst ratings with a healthy dose of skepticism.

The ask, on the other hand, is the lowest price an investor is willing to sell a stock for. If you see an ask of $100.05, sellers are currently selling for $100.05 per share. Google’s charts are pretty bare-bones, making them a great place to learn. But once you start studying more advanced charts, you’ll run into a few more terms worth knowing.

One-Year Price Target Estimate

Daily charts helps you spot specific buy points, buy zones and sell signals. Once you learn what to look for, you’ll see that stock charts and technical analysis give you objective, fact-based insight into key questions that impact your stock investing strategies. Stock charts simply give you a visual representation of changes in share price and trading volume. They paint an objective picture of what is really going on with the market and individual stocks. Understanding both fundamental and technical analysis is crucial to stock picking.

If it’s trending down, that’s a sign you should avoid it absent other information. No chart style is any better than the other—it also depends on your time horizon. If you are looking for a quick play, then the OHLC charts will show you the trend by your time interval.


This action is reflected by a long red real body engulfing a small green real body. The pattern indicates that sellers are back in control and that the price could continue to decline. Just like a bar chart, a daily candlestick shows the market’s open, high, low, and close price for the day. The candlestick has a wide part, which is called the “real body.” And here is a weekly chart showing the original setup, breakout, and price action thereafter.

The following terms are used every day by both long- and short-term investors. Perhaps you’re weighing a job offer, looking at economic trends among companies in your region, or pitching potential clients at a firm. Looking at stock data can give you a better sense of what’s going on.

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