Charting, in the context of technical analysis, involves the use of visual representations such as graphs and charts to track the price movements and trading volumes of securities over specific periods of time. This can range from short-term periods like minutes and hours to long-term periods like weeks, months, or years.
There are various types of charts used in technical analysis, including line charts, bar charts, and candlestick charts. Each type provides a unique way to visualize price data, allowing traders to analyze market trends and identify potential trading opportunities.
Line charts show a simple line drawn from one closing price to the next, bar charts show the opening, closing, high, and low prices for each period, and candlestick charts use a combination of lines and coloured bars to showcase more information about the price movement.
The key purpose of charting is to help traders forecast future price movements based on historical patterns. Essentially, by studying past market action, they aim to make an educated prediction about what could happen next.
