Technical analysis relies heavily on charts. By looking at a chart, traders and investors can identify patterns and trends that can help them make informed decisions.
The most common types of charts used are Line Charts, Bar Charts, and Candlestick Charts. Candlestick charts are incredibly popular because they display the open, high, low, and close prices for a specific period.
Line charts are the most basic and link the closing prices over a specific period. They are excellent for identifying long term trends without the 'noise' of intraday price movements.
Candlestick charts provide the most detail. The 'wicks' or 'shadows' indicate the highest and lowest prices of the session, while the body represents the opening and closing prices. Green or white bodies indicate price increases, whereas red or black bodies represent price declines.