![]() They use other kinds of stock charts as well, but bar charts are among the most popular. Investors often use stock charts called bar charts to perform technical analysis on a given stock. In a way, technical analysis is more interested in how to predict the future based on what data is available for the past, rather than looking at the underlying reasons for why the trend is happening. Instead, it looks for patterns in historical data, such as price movements in the market. Technical analysis cares not for the instrinsic value of a business, as this can often be subjective. Performance is evaluated based on charts and other tools that provide insight to a company’s future. Meaning that a company thats doing well, will continue to do well, all things being equal. The crux of technical analysis is that past performance indicates future performance. The price can only go so low before buyers are willing to step in and the stock has trouble falling below this amount. On the other hand, support trend lines happen when the price of a stock is on the downturn. A resistance trend line follows an upward trend and leads to a price that the stock has trouble breaking through and above. On top of these trends there is also resistance and support. It is worth nothing that these trends do not happen in a straight line but can be made clearer by plotting the moving average instead of the daily stock price. Sideways trends are neither up or nor down and the price remains roughly the same over time. Uptrends are bullish, meaning that they are on the upswing. Downtrends are bearish, meaning that the stock price is on the way down. There are 3 basic types of stock trends, down, up and sideways. Using this metric, an increase or decrease from day-to-day may not change the moving average much, but over time trends become clear. Dividing this total by 50 gives the 50 day moving average for a given day. For example, a 50 day moving average will follow the closing price of a stock for 50 business days in a row and add them all together. Its called that because it constantly changes over time. Often when we talk about how to read stock trends, we are talking about moving averages. What Are Penny Stocks And How Do They Work.8 Questions To Ask When Choosing A Broker. ![]()
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