Technical analysis uses charts to visualize trends in security prices over time. There are three main types of charts - line charts show closing prices connected with straight lines, bar charts show the high, low, and closing price for each period through bars, and Japanese candlestick charts also show open, high, low, and closing prices. Closing prices are the most important for analysis as they represent the end of day price and are used in most techniques. Charts help analysts identify patterns and trends to inform trading decisions.

1. Charts in Technical Analysis
Aju Joy

2. Points to remember
• Charting represents a key activity in technical
analysis.
• It is the security prices that are charted
• Prices are volatile
• There are four prices:
• High, low, closing and opening price
• By far closing price is the most
important, because it is used in most of the
analysis

3. Types of charts
• Line chart
• Bar chart
• Japanese candlestick chart

4. Line chart
• Simplest price chart
• Closing prices are charted on the
graph in a daily basis.
• Each closing price would be
represented by a point on the chart.
• All these points would be connected
by a straight line which would
indicate the trend of the market.

5. 1-month line chart of Exxon-Mobil Corporation.

6. Bar chart
• Most popular chart used by analysts
• In this chart the highest, lowest and the closing
prices are plotted on a day to day basis.
• A bar is formed by joining the highest and lowest
price of a day by a vertical line.
• The top of the bar represents highest price
• The bottom bar represents the lowest price
• A small horizontal hash on the right hand side is
used to represent the closing price
• And the opening stock is marked by a hash on the
left hand side.

7. 6-month bar chart of Citigroup using the arithmetic scale, where
the gridlines are equally spaced and represent the same price
increments.