Andrew Baxter – Reading & Understanding Charts

Description

This trading will help you come to grips with reading and interpreting charts.

 

Coverage includes…

 

 

Why Use Charts?

The Components

Line Charts

 

 

Open High Low Close Charts

Candlestick Charts

Reading Sentiment

 

 

Expanding Trading Ranges

Inside and Outside Days

Border Days

 

 

Trends (short medium long term)

Short Term Trend Reversals            The Key Reversal

 

 

Support and Resistance

Trend Lines

Fanning Trend Lines

 

 

Phases

Cycles and Trends

Chart Patterns

 

 

Pennants

Rectangles

Double Top

 

 

Double Bottom

Head and Shoulders

The Wedge

 

The following demonstrates the presentation format and content…

 

 

 

Andrew Baxter: “The trading range is defined as the distance between the high

 

and the low for that particular trading session.

 

 

 

In our schematic on the left, what we can see is that our trading range is widening,

 

as it is on the right hand side also.  Here we would be looking at positive closes,

 

and expanding trading range which is likely to see a continuation of our trend.

 

 

 

Similarly, on the far side, a negative closes and expanding trading range we are

 

likely to see our trend continue.  Both of these patterns suggest that there is an

 

increase in momentum in the underlying direction, and that is reflected by the fact

 

that our trading range is growing.  We opened here and we have closed up here.

 

The previous day we opened here and closed at this level.  So we can see that the

 

acceleration or momentum is increasing through that widening trading range.”

 

 

 

Andrew Baxter: “In contrast, we can see the opposite when we get a contracting

 

trading range.  We still may have positive closed, but the contracting trading range

 

may be showing that the trend is about to reverse.

 

 

 

Likewise with our negative closes on the far side, together with the contracting

 

trading range, we may be seeing the trend about to reverse there.

 

 

 

Both of these patterns are showing that the underlying trends may be running out

off puff and therefore likely to reverse.”