Type of Charts – Constructing and Intrepreting Charts
Patterns can be seen in all Chart styles
- Line charts contain the less amount of information but just as useful as other styles.
- Bar charts represent each time period as a bar and add information about the size of the range (high-low) which depicts the a measure of volatility.
- Candlesticks add a level of detail absent from bar charts by coloring the candle to show whether the close was up or down relative to the open.
- Point and figure charts ignore time and show only price actions, focusing on the trends.
RSI Relative Strength Index – Most Popular Indicator of Bloomberg
% of Charts Using | Purpose | |
RSI | 44 | Reversal |
MACD | 22 | Strength of Trend |
Bollinger Bands | 12 | Strength of Trend |
Stochastics | 9 | Reversal |
DMI | 5 | Direction of Trend |
Volume at Time | 3 | Liquity |
Bollinger Bands
- Bands drawn 2 standard deviations above and below a 20-period moving average.
- A measure of volatility where volatility as bands narrow and expands as bands widen.
- In theory, two standard deviations should contain 95% of the data points.
- In practice, the bands contains about 90% of the price action. This is useful to know since it tells us the break is unusual and relatively rare.