How Do You Read Stock Market Charts?
Stock charts are online everywhere these days. But just exactly what should you look for in a stock chart? What do you try to make of all those price movements? The most important thing is to keep it simple. Ignore the fancy indicators that you can get with the charts and focus on just a few simple ideas. Find the trend direction. This might be the single most important, yet overlooked, information in a stock chart. Price trend direction can be up, down or not trending. Much of the time, prices are not trending, and this is called “consolidation.” Use a 20- and 50-day moving average (MA) to determine trend direction. Most charts will allow you to set the length of time for MA. Generally speaking, when the 20-day MA is above the 50-day MA, the stock is trending up. If the reverse is true, then the stock is trending down. Determine where price support is on the chart. By looking at the price history going back 3 to 12 months, you can see where prices have held up on a consistent basis. F
