Reading & Understanding Charts – Andrew Baxter

This trading will help you come to grips with reading and interpreting charts.

Coverage includes…

Why Use Charts?

The Components

Line Charts

Open High Low Close Charts

Candlestick Charts

Reading Sentiment

Expanding Trading Ranges

Inside and Outside Days

Border Days

Trends (short medium long term)

Short Term Trend Reversals The Key Reversal

Support and Resistance

Trend Lines

Fanning Trend Lines

Phases

Cycles and Trends

Chart Patterns

Pennants

Rectangles

Double Top

Double Bottom

Head and Shoulders

The Wedge

The following demonstrates the presentation format and content…

Andrew Baxter: “The trading range is defined as the distance between the high and the low for that particular trading session.

In our schematic on the left, what we can see is that our trading range is widening, as it is on the right hand side also. Here we would be looking at positive closes, and expanding trading range which is likely to see a continuation of our trend.

Similarly, on the far side, a negative closes and expanding trading range we are likely to see our trend continue. Both of these patterns suggest that there is an increase in momentum in the underlying direction, and that is reflected by the fact that our trading range is growing. We opened here and we have closed up here.

The previous day we opened here and closed at this level. So we can see that the acceleration or momentum is increasing through that widening trading range.”

Andrew Baxter: “In contrast, we can see the opposite when we get a contracting trading range. We still may have positive closed, but the contracting trading range may be showing that the trend is about to reverse.

Likewise with our negative closes on the far side, together with the contracting trading range, we may be seeing the trend about to reverse there.

Both of these patterns are showing that the underlying trends may be running out off puff and therefore likely to reverse.”